The Bank of Canada lowered its overnight rate target to 2.50%, a 25 basis point cut. This marks the first rate reduction from the Bank since March. The move comes amid slowing Canadian and global economic growth and a weaker labour market that has led to rising unemployment. In addition, Canada’s GDP declined in the second quarter due to tariffs and trade uncertainty. However, according to the Bank, consumption and housing activity both grew at a healthy pace.
Despite these challenges, the Bank noted, “With a weaker economy and less upside risk to inflation, Governing Council judged that a reduction in the policy rate was appropriate to better balance the risks. Looking ahead, the disruptive effects of shifts in trade will continue to add costs even as they weigh on economic activity. Governing Council is proceeding carefully, with particular attention to the risks and uncertainties”.
For buyers and sellers, this rate cut could bring renewed momentum into the housing market heading into the fall. Lower borrowing costs may improve buyers’ affordability and encourage more market activity. At the same time, sellers could see an uptick in demand. That said, ongoing global uncertainty and slow economic activity may temper confidence in the coming months.
Bank of Canada’s 2025 Policy Interest Rate Announcement Schedule.
Bank of Canada announces its decision for the overnight rate target eight times a year, typically on a Wednesday. The schedule for 2025 is as follows:
Wednesday, January 29
Wednesday, March 12
Wednesday, April 16
Wednesday, June 4
Wednesday, July 30
Wednesday, September 17
Wednesday, October 29
Wednesday, December 10
Read the full interest rate announcement below:
The Bank of Canada today reduced its target for the overnight rate by 25 basis points to 2.5%, with the Bank Rate at 2.75% and the deposit rate at 2.45%.
After remaining resilient to sharply higher US tariffs and ongoing uncertainty, global economic growth is showing signs of slowing. In the United States, business investment has been strong but consumers are cautious and employment gains have slowed. US inflation has picked up in recent months as businesses appear to be passing on some tariff costs to consumer prices. Growth in the euro area has moderated as US tariffs affect trade. China’s economy held up in the first half of the year, but growth appears to be softening as investment weakens.
