While the Bank of Canada isn’t making any promises, there’s a growing sense that more rate cuts are coming in 2025.
After a steady decline in inflation earlier this year, February saw a bump—rising to 2.6% from 1.9% in January. But that jump was expected, and mostly due to the end of the federal sales tax holiday. For a few months, Canadians enjoyed a break from GST and HST on everyday items like kids’ clothing, restaurant meals, and personal essentials. Now that the tax break has ended, prices naturally adjusted back up.
In other words, the rise in inflation wasn’t driven by demand—it was driven by taxes. And that matters when the Bank of Canada is deciding whether inflation is sticky or simply reacting to temporary changes.
Governor Tiff Macklem continues to take a measured tone, saying the Bank will wait for clear signs that inflation is on a sustained path back to 2% before cutting further. But many economists say the Bank may not be able to wait much longer.
Canada’s economy is softening. Growth has slowed, job numbers have cooled, and households—especially in places like the GTA—are still feeling the pinch of high borrowing costs. Even with the February inflation bump, core inflation (which excludes volatile items) is easing, which gives the Bank more room to move.
Major banks like RBC and BMO are already forecasting more rate cuts later this year and into 2025. The thinking? Sluggish growth and consumer fatigue are likely to outweigh inflation risks going forward.
Adding to the unpredictability, a snap federal election was just called earlier this week. This introduces a new layer of uncertainty for the months ahead. Depending on the outcome, we could see policy shifts that impact everything from housing and affordability programs to economic strategy.
While it’s too early to say how the election will shape Canada’s financial future, one thing is clear: now is a smart time to get informed, weigh your mortgage options, and make a plan.
If you’re renewing a mortgage, buying a home, or just watching rates closely, this is all important. Fixed mortgage rates have already started to inch down, and if the Bank of Canada cuts again, we could see more competitive options for borrowers across the board.
Variable-rate holders could also finally see some real relief—something that’s been a long time coming after the aggressive rate hikes of 2022 and 2023. Even with some short-term uncertainty, there are good opportunities on the horizon—especially if you know what to look for. As your local mortgage expert in the Greater Toronto Area, I’m here to help you understand your options and make the best move for your situation. If you’re thinking about your next step, let’s chat.
For more updates on how these changes might affect your mortgage or for the latest in Canadian real estate trends, contact Victor Szasz at Go Approval Mortgages. Reach out to Victor at [email protected] or call 647-880-5554