Finally!! The Bank of Canada cuts the rate. 

Today, the Bank of Canada cut the Prime rate by 0.25%.  Hooray!  This will directly affect Variable rate mortgages and indirectly affect Fixed rate mortgages. 

It has been 27 months since the Bank of Canada governor, Tiff Macklem, started hiking rates to combat inflation.  The last hike was in July 2023. Since then, it’s been a guessing game to see when Macklem would act.. Finally, he cut the rates which is much needed and welcome news to all.

Last September we started seeing the BIG SIX BANK Economists call for a rate cut.. There is no logical reason to keep rates at these elevated levels any longer, they said.  Consumers and businesses are struggling and hurting while they try to absorb the massive rate increases.

https://financialpost.com/news/canada-standard-of-living-faces-worst-decline-40-years

BUT STILL, THEY DID NOTHING.   

Put another way, the Bank of Canada has met 18 times to set the rate.. it’s only gone up, until today.  A big reason for this is due to the US posting stronger than expected economic data.  Their economy is stronger.  So, our Bank of Canada governor, Tiff Macklem, has been reluctant to start cutting rates before the US Fed does.

https://ca.finance.yahoo.com/news/opinion-canada-economy-stagnated-despite-100040373.html

The problem with this strategy is that our economy is lagging way behind  the US with no let up in sight.  If it wasn’t clear before, it’s crystal clear now that our current government’s fiscal policies are an outright disaster..We can’t wait until the US lowers their rates.

There have been many reports coming out to show our economy is shrinking, even while our population has exploded with never before seen immigration numbers. 

THINK ABOUT THIS FOR A MINUTE.

Our population grew by more than 3,000,000 people over the last 5 years..  This has always resulted in a higher GDP.  But somehow our economy has shrunk.  It takes a special kind of leader to accomplish this! 

CONCLUSION.. THIS IS THE FIRST RATE CUT.

This the beginning of the long awaited rate cutting phase. We can expect more to happen over the next few years as most Economists forecast for 2.25% rate drop by the end of 2025 (CIBC Economics). We will be watching and reporting. Time to exhale.. 

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis: 416-224-0114; steve@canadamortgagenews.ca