What It Means for Us
The Bank of Canada just cut its key interest rate by 0.25%, bringing it down to 2.5%. This is the first time they’ve lowered rates since March, and it’s their way of trying to give the economy a bit of a boost.
So why now? A few things have been piling up:
The job market has been softening — over 100,000 jobs were lost in the past couple of months, and unemployment is sitting at 7.1%.
Inflation (excluding gas) has cooled off, now at 1.9%, which is right around the Bank’s 2% target.
U.S. tariffs and trade issues are still hitting Canada’s industries hard — think steel, aluminum, lumber, and even canola. That’s kept a lot of businesses from investing and growing.
The economy actually shrank in the second quarter, and exports to the U.S. have dropped.
With all of that in mind, the Bank decided it made sense to bring rates down. As Governor Tiff Macklem put it, the risks have shifted, and a cut helps “better balance things going forward.”
What it means for us
The big banks (TD, BMO, CIBC, RBC) already followed suit and lowered their prime rates to 4.70%. That’s good news if you’ve got a variable-rate mortgage, a line of credit, or anything tied to prime — your borrowing costs just went down a bit.
On the flip side, one small cut isn’t going to light the economy on fire. Businesses are still cautious, and trade uncertainty is still hanging over us. But for homeowners and buyers, even a little relief on monthly payments can make a difference.
What’s next?
Economists think this probably isn’t the last cut we’ll see. If the job market keeps sliding or trade tensions flare up again, we could see more easing into 2026. The Bank’s next rate announcement is coming October 29, so we’ll find out soon enough if they’ll pull the trigger again.
The Takeaway
This rate cut isn’t a game-changer, but it does make borrowing a little cheaper and signals that the Bank of Canada is paying close attention to the slowdown. For anyone with a mortgage or thinking about buying, it’s worth watching where rates go from here.
If you are thinking about making a move or have any questions about the market i'd love to chat 📱778-792-4226 or 587-888-0024
