Bank of Canada Update – 0.25% RATE CUT

REFINANCE OPPORTUNITY (see note at bottom) Here are the highlights: Interest Rate Cut: Bank of Canada cut interest rates by 0.25%, lowering Prime Rate from 5.45% to 5.2%, the sixth consecutive cut.This brings the total rate cuts to 2% since June. Economic Indicators: inflation down in December from 1.9% to 1.8%GST break helped bring inflation down but will have a reverse effect on future monthsCanadian dollar continues to depreciate vs USD​Trade conflict could lead to weaker GDP & higher prices Job Market: Dec jobs report the best in years91k job gains (40k from public sector)Unemployment drops slightly from 6.8% to 6.7% Forecasts: 5 of the 6 Big Banks forecast further rate cuts in 2025:range from another 0.5% – 1%Scotia is the outlier seeing no more rate cuts Next Bank of Canada Meeting: Scheduled for March 12th, 2025

Good morning, The Bank of Canada has dropped rates by 0.25% at this morning’s rate announcement, the sixth consecutive cut for a total of 2% since they began in June. Today’s release began with a big disclaimer — all forecasts are out the window depending on what happens with this pending trade war.  All eyes are on the cheeto in chief & what will happen with these threatened tariffs.   While the short term impact would be inflationary, long term implications would not be good — potential layoffs, reduced spending & economic slowdown would amplify recession concerns.  Over 70% of Canada’s goods & services are sold to the US so some big potential implications here. On the inflation front, December CPI dropped again from 1.9% to 1.8%.  The GST exemption helped bring down prices but that can setup for the reverse effect on inflation in the coming months.

Onto jobs, the December employment data was a big print & the strongest in years — over 90,000 net new jobs, increase in the employment rate & decrease in unemployment.

In terms of what’s to come in 2025 for rates, 5 of the 6 big banks in Canada are expecting anywhere from another 0.5% – 1% in cuts for the year with Scotia being the outlier calling for no further cuts.

source REFINANCE ALERT: ​ There is still a sweet spot right now with how mortgage penalties are calculated where ANYONE WHO OBTAINED A FIXED RATE MORTGAGE BETWEEN FALL LAST YEAR TO SPRING can likely refinance into lower rates & save a significant amount of interest.  If you have any friends or family who got a mortgage during that time frame, get in touch before this window of opportunity gets taken away. The next Bank of Canada meeting is March 12th, 2025.   For more updates and insights, follow @zupanmortgages on Instagram for daily content.