Bank of Canada Holds Key Interest Rates at 2.75% - Fifth Avenue REM mediaiqdigital tracking pixel
Home Buying, Market Intelligence, Real Estate News, Your Next Home | April 16, 2025

On April 16, the Bank of Canada (BoC) announced another interest rate cut 25 basis points, reducing its rate to 2.75%, with bank rate at 3%.

The bank had been cutting the policy rate from a five per cent peak since June 2024, reducing it by 225 basis points — more than any other G7 central bank.

Impact of U.S. Tariffs

The Bank of Canada has kept its key rate at 2.75 per cent, choosing not to add more support to the economy, as uncertainty around U.S. President Donald Trump’s tariffs clouds the Canadian economic forecast.

While tariffs and market volatility will slow the economy, policymakers are concerned that the global trade war could unleash another wave of inflation.

In a financial crisis or pandemic, time is of the essence. However, in a trade war, things are slower moving. Officials have the luxury of not being forced into a decision they may later regret.”

Economic Outlook and Inflation

Despite robust GDP growth and low unemployment rates in late 2024, the trade conflict has introduced significant risks to economic stability. The BoC anticipated that inflation would rise to approximately 2.5% in March. Influenced by a weaker Canadian dollar and potential retaliatory tariffs. The central bank emphasized the challenge of balancing support for economic growth with the need to manage inflationary pressures.

Future Monetary Policy Considerations

Looking ahead, the Bank of Canada cautioned that further rate adjustments would be approached with caution. The evolving trade situation necessitates careful assessment of both inflationary and demand-related factors before making additional monetary policy changes.

Here are 3 Reasons Why It’s Still a Good Time to Buy in this Buyer’s Market:

  • Lower Mortgage Payments: Homeowners with variable-rate mortgages could still see lower payments. They could also benefit from more of their payment going towards the principal rather than interest.

  • Opportunity for Buyers: With increased inventory in some markets, this could be a favourable time for potential homebuyers. Particularly in Greater Vancouver. Where there’s more supply than demand.

  • Future Rate Cuts: Some forecasters predict additional rate cuts may continue throughout 2025. This could still further benefit buyers and homeowners.

Looking for a home with Canadian Sourced Materials?

Read our latest article from Highstreet Village on how they’re building homes using Canadian sourced materials

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