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RATE CUT IN THE OFFING BY BANK OF CANADA. VARIABLE AND FIXED RATES EXPECTED TO GO DOWN. CONTACT ME FOR A MORTGAGE IN CANADA
September 14, 2025 | Posted by: Anvaar Rasool
September 14, 2025 | Posted by: Anvaar Rasool
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Canada's central bank has faced growing pressure to resume easing after holding rates steady since March 2025, following a cumulative 225-basis-point reduction - one of the most aggressive among its G10 peers
Last week, official data showed the economy shed 65,500 positions in August, pushing unemployment to its highest level in nine years outside the pandemic. GDP contracted by 1.6% in the second quarter, hit by U.S. tariffs on Canadian exports of steel, aluminium and automobiles.
The weakness in Canada’s economy also means there is plenty of unused capacity, giving the Bank of Canada more room to look through temporary price pressures. Headline inflation is near target and business expectations remain steady. Some of the forces that pushed prices higher earlier, including counter-tariffs and a weaker loonie, have now reversed.
The bank is expected to leave the door open to more cuts, especially if the next inflation reading shows little sign of heat. That report arrives Tuesday, just a day before the rate decision. The consensus forecast expects headline inflation to rise back up to 2.0% in August from 1.7% in July, mostly because of base effects. But with the monthly number essentially flat and core measures steady, the data isn’t expected to stand in the way of the BoC restarting rate cutting.
In Canada, bond yields have also edged lower, with the Government of Canada five-year yield back in the 2.70% range for the first time since May. That has put downward pressure on fixed mortgage rates, with some five-year terms now priced below 4% again. The shift has already prompted a round of rate cuts by numerous lenders. Variable-rate holders would see monthly payments ease if the central bank delivers as expected.