Bank of Canada Rate Cut Sept – 0.25%

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. 




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.