Bank of Canada Rate Cut Sept – 0.25%

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Here are the highlights:Interest Rates down:Bank of Canada lowered interest rates 0.25%.  New Prime Rate of 4.7%This is the first cut since March.The total number rate cuts this cycle remains at 2.50%.

Economic Indicators:GDP declined in Q2 1.6%Global economy showing signs of slowingHousing finally picking up in Canada

Job Market:Employment weaker than expected, falling 0.3% in August after 0.2% drop in JulyUnemployment up to 7.1%

Inflation:CPI rises modestly to 1.9%Median & trim inflation at top end of 3% target​Inflation contained for time being

Forecasts:​Big Bank rate forecasts range from another 0.25% – 0.5% in cuts into next year (this relates to variable rates.. fixed rates expected to be slightly higher in 2026)

Next Bank of Canada Meeting:Scheduled for Oct 29th, 2025
The Bank of Canada cut rates this morning 0.25%.  

Q2 hasn’t been pretty in Canada – GDP declined by 1.6%, exports are down 27%, business investment continues to decline & unemployment is up to 7.1%. 
Inflation is somewhat contained for the time being.  Add in the expectation of the US Fed cutting rates later today & a cut was a sure thing coming into today.  

Do you remember spring last year when Carolyn Rogers of the Bank of Canada flagged a national crisis in productivity?  Our GDP per capita has been contracting for 3 straight years & we continue to be desperate for business investment.



Well, fast forward a year & a half since that warning & Canada is now experiencing the fastest capital flight since the financial crisis. 
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Investment is leaving the country.  


This makes productivity worse.  This weakens the loonie.  This can pressure rates upwards to defend that & create a feedback loop where higher rates continue to stifle growth & further reduce investor confidence.  It’s continued stagflation & we’re not doing anything about it.

Longer term, inflation is going to continue to be THE issue to watch in Canada. 

FEELING THE PINCH?​
If you’re feeling the pinch from the punishing cost of living these days & have taken on credit card or loc debt, GET IN TOUCH with me today.  The higher interest debt has a way of lingering around & strangling your monthly cashflow.  WE CAN HELP fix that & get you some breathing room.