04/30/2025
Snapshot :
1. Prime Rate: 4.95% (No Change)
2. Bank of Canada Lending Rate: 2.75% (No Change)
3. Canada 5 Year Government Bond: 2.74% (-0.05)
4. CPI Inflation (March): 2.3% (-0.4%)
5. Unemployment (March): 6.7% (+0.1%)
Key Economic Dates :
1. May 9, 2025 - Unemployment Release
2. May 20, 2025 - April CPI Release
3. June 4, 2025 - BoC Rate Announcement
The Outlook
With the Canadian election now behind us, economists have put on their thinking caps to figure out the trajectory of our economic future here in Canada. Table A below shows the current interest rate policy prediction from each major bank. Many are expecting another 2 rate cuts this year and then staying stable in 2026 while National Bank and RBC are actually expecting a rate increase by end of 2026. Scotiabank on the other hand is expecting all the cuts to happen in 2026. The only thing they seem to be kind of on the same page about is another cut for this year. In regards to tariffs, Trump is set to ease tariffs on U.S. car makers after lots of pushback from the auto industry. Some good news for inflation and jobs on that front at least. We're expecting the probability of BoC rate cut in June at 70%.
🏦 BoC Rate Cut Probability: 70%
Next Decision: June 4, 2025
📉 Current Policy Rate: 2.75%
📈 Inflation: 2.3% (approaching target)
🌐 Tariff Uncertainty: Medium
📊 Economic Outlook: Weakening but hopeful
📢 Tone: Cautious
South of the Border While Trump is still urging Fed Governor Jerome Powell to cut rates, the Fed governors are staying cautious as they feel the continued tariffs will take time to show up in the inflation readings. They warn that they need to see the full effect of the tariffs play out before they make a decision to move forward with cuts. The good news is US treasury note yields have started to come down in the last week which effects many of the debts American consumers and companies carry. An early sign of expected rate cuts.
The Liberal Minority Win and Housing With Carney and the Liberals winning a minority government, Canada’s housing policy is expected to continue along familiar lines, emphasizing federal funding for new construction and partnerships with municipalities. However, after nearly a decade of Liberal rule marked by repeated announcements but limited progress on increasing housing supply, skepticism remains high. A minority mandate may also limit the government’s ability to pass significant reforms, especially if opposition parties push back on key measures.
