Bank of Canada Rate Cut to 2.75% - Is it a Buyer's Market?

Home Buying, Market Intelligence, Real Estate News, Your Next Home | March 12, 2025

On March 12, the Bank of Canada (BoC) announced another interest rate cut 25 basis points, reducing its rate to 2.75%, with bank rate at 3%.

This marks the seventh consecutive rate cut, reflecting the central bank’s efforts to support the Canadian economy amid escalating trade tensions with the United States.

Impact of U.S. Tariffs

The recent U.S. administration’s decision to impose 25% tariffs on Canadian steel and aluminum imports has significantly heightened trade uncertainties. In response, Canada announced reciprocal tariffs on $30 billion of U.S. goods, further straining economic relations. BoC Governor Tiff Macklem expressed concerns that these developments could dampen consumer spending and business investment, thereby slowing economic growth.

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 anticipates that inflation will 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 see lower payments or 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 throughout 2025, which may further benefit buyers and homeowners.