Bank of Canada Holds Policy Rate at 2.75% | June 4, 2025

The Bank of Canada announced today, June 4, 2025, that it will maintain its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%. This decision comes as the Bank navigates a complex economic environment shaped by global trade uncertainty, shifting inflation, and evolving domestic conditions.

Key Highlights from the Announcement

• The overnight rate remains unchanged at 2.75%.
• Canadian economic growth was slightly stronger than expected in Q1, but the outlook for Q2 is weaker.
• Inflation eased to 1.7% in April, largely due to the removal of the federal carbon tax. However, core inflation measures have edged up, showing some underlying price pressures.
• Housing activity has slowed, with a notable drop in resales, and consumer confidence has declined.
• The labour market has softened, particularly in trade-intensive sectors, and unemployment has risen to 6.9%.
• The Bank is closely watching global trade developments, especially US tariff policy, and how these may impact Canadian exports, business investment, and consumer prices.

Why Did the Bank Hold the Rate?

• The Bank’s Governing Council cited several reasons for holding the rate steady:
• Uncertainty remains high around US trade policy and tariffs, which could affect Canadian exports and broader economic activity.
• While inflation has recently eased, core inflation and business intentions to pass on higher costs suggest underlying price pressures persist.
• The Canadian economy is softer but not sharply weaker, and the Bank wants to see more data before making any moves.

What Could This Mean for Homebuyers and Sellers?

For those in the real estate market, today’s announcement offers a measure of stability:

• Mortgage rates are likely to remain steady in the near term, which may help buyers and homeowners with budgeting and planning.
• Housing activity has slowed, with fewer resales and softer consumer confidence, so buyers may find less competition, while sellers may need to adjust expectations.
• Economic uncertainty and rising unemployment could impact affordability and demand, making it important to stay informed about market trends.

Looking Ahead

The Bank of Canada will continue to monitor the impacts of global trade, inflation, and domestic economic conditions closely. The next interest rate announcement is scheduled for July 30, 2025.

What Should You Do Next?

If you’re considering buying, selling, or refinancing, now is a good time to review your options. The current environment calls for careful planning and expert advice. Reach out if you have questions about how today’s rate decision could affect your real estate goals—I’m here to help you navigate these changing times!

Read the Press Release.

Whether you’re a homeowner, prospective buyer, or real estate investor, understanding these market changes is crucial. As your trusted REALTOR®, I’m here to help you navigate these shifts and make informed decisions! Call, text, email, or DM me to chat about how this announcement affects your real estate plans!

For more information, contact:

Susan Moffat, REALTOR® with Century 21 In-Studio Realty Inc., Brokerage
519.377.5154
susan.moffat@c21.ca