📊 Bank of Canada Holds Interest Rate at 2.75% — What It Means for You

On June 4, 2025, the Bank of Canada (BoC) announced it is holding the overnight rate steady at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%. This marks the second consecutive rate hold following a series of cuts throughout 2024 that were implemented to stabilize the economy after a period of elevated inflation.

But what does this mean for you as a homeowner, buyer, or seller? Let’s break it down.

🧩 Economic Highlights

1. A Mixed Growth Picture
Canada's economy grew by 2.2% in Q1 2025, slightly above expectations. This was driven mainly by strong exports and businesses stocking up inventory—likely to get ahead of ongoing global trade tensions.

However, the Bank expects weaker growth in Q2, as the temporary boost from exports fades and domestic demand remains soft.

2. Inflation in Flux
While the elimination of the federal carbon tax helped pull headline inflation down to 1.7%, core inflation (excluding taxes and volatile items) ticked up to 2.3%, slightly above the BoC’s comfort zone.

This upward pressure is largely due to businesses adjusting prices in response to ongoing tariff-related cost increases, particularly those tied to U.S. trade actions.

3. Labour Market Softening
Unemployment has risen to 6.9%, especially in trade-sensitive sectors like manufacturing and logistics. Consumer confidence has dipped, though household spending remains relatively stable.

🌍 Global Uncertainty Still in the Driver’s Seat

The BoC highlighted uncertainty around U.S. trade policy—especially shifting tariffs—as a major reason for pausing rate adjustments. The potential impact on Canadian exports, business investment, and inflation expectations remains top of mind for policymakers.

The Bank also noted global volatility, including a slowdown in China, fluctuations in oil prices, and changes to defence spending in Europe. All of these have ripple effects on Canada's economy.

🏡 What Does This Mean for Real Estate?

While interest rates didn’t move this round, the current environment presents an opportunity for buyers and sellers to reassess their plans:

• Buyers: A stable interest rate means predictability. If you’ve been on the fence, now may be the right time to get pre-approved and explore your options.

• Sellers: Although the economy is cooling, well-priced homes are still moving. Strategic pricing and strong marketing are more important than ever.

• Investors: With borrowing costs holding, it may be a good time to evaluate long-term opportunities, especially in areas with strong rental demand.

🔮 What’s Next?

The next Bank of Canada announcement is scheduled for July 30, 2025. Until then, the Bank will closely monitor:

• Inflationary trends

• Global trade developments

• Labour market data

• Consumer spending and business investment

Any significant changes could impact the timing of future rate cuts—or signal a shift in direction altogether.

🗝️ Let’s Talk Strategy

Navigating a shifting market takes knowledge, timing, and the right plan. Whether you're thinking about buying, selling, or just curious how today’s trends impact you, I’m here to help you make sense of it all.

✨ Tara Kennedy
🏡 REALTOR®, ABR, RENE, SRS
📞 236-992-8989
🌐 TaraKennedy.ca
📧 TaraKennedySells@gmail.com

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