08/28/2026
A trade war can slow the Canadian economy. Businesses delay investment, employment can soften and consumers become more cautious. That can create pressure for lower interest rates.
But tariffs can also make goods, materials and supply chains more expensive. That can push inflation higher — and inflation is exactly what can prevent the Bank of Canada from cutting aggressively.
So we have two forces pulling in opposite directions.
Slower economy = downward pressure on rates.
Higher inflation = upward pressure on rates.
And fixed mortgage rates have another moving piece: the bond market. When uncertainty rises, bond yields can move quickly as investors reassess growth, inflation and what the Bank of Canada may do next. Canadian bond yields have already reacted to the latest trade escalation.
This is why I keep saying: don’t build your mortgage strategy around predicting the next rate announcement.
Build it around your household, your cash flow, your risk tolerance and how much flexibility you need.
Fixed may give you peace of mind.
Variable may give you flexibility.
Neither is automatically “better” in a volatile market.
The right mortgage is the one that still works when the headlines change.
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