Bank of Canada Holds Steady

The recent rebound in core inflation and improved timely activity indicators prompted the Bank of Canada to keep rates on hold at 2.75% on Wednesday. Policymakers will also want to wait for more clarity on future trade relations with the US. We still expect easing to resume soon, though two cuts this year is beginning to look less likely. 

“If a weakening economy puts further downward pressure on inflation … there may be a need for a reduction in the policy interest rate.” 
—BoC Statement, July 30, 2025 

The announcement has made made its intentions more transparent. At this point, it’s leaning towards keeping rates steady or gently lowering them later. 

“Canada is not strong enough to cheer, not weak enough to cut,” said TD economist Maria Solovieva. Her read of the latest Bank of Canada business and consumer surveys suggests that confidence has deteriorated again in recent months, after showing signs of recovery late last year. 

What’s keeping the Bank on hold, despite soft demand, is inflation. Core measures, particularly trimmed mean and weighted median CPI, remain above 3%, and services inflation is proving stubborn. Scotiabank’s Derek Holt argues the Bank is “still fighting the last inflation fight,” 

Here’s how implied probabilities for September are forecasted:

For the Bank of Canada meeting on September 17: 

• 25 bps cut: 15% chance 
• No change: 85% chance 

For the Federal Reserve meeting on September 17: 

• 25 bps cut: 45% chance 
• No change: 55% chance 

Tariff Updates

Prime Minister Mark Carney said on Monday that trade negotiations between Canada and the United States are intense, stressing a fully tariff-free deal is improbable.

On Thursday, Trump signed an order lifting his tariff on Canadian imports from 25% to 35% (CUSMA goods are still exempted).

First National Sells Controlling Stake

In a 2.9 billion dollar deal, First National, one of Canada’s biggest non-big 5 lender is selling its controlling stake to Global alternative asset manager Brookfield Asset Management Ltd., and private equity firm Birch Hill Equity Partners Management Inc. 

First National’s stock closed Friday at $42.48 and gapped open Friday AM to over $48 a share. The $48/share deal price is below the 2021 all-time high of $50.15 

June Housing Numbers

The 2.8% m/m rise in home sales in June builds on the 3.5% gain in May. Together, they hint at a more sustained pick-up in demand after a tariff-induced weak start to the year, with the recovery led by a cumulative 17% jump since April in sales in the Greater Toronto Area. Meanwhile, new listings fell by 2.9% m/m in June but remained elevated.

Rents

However, rents continued to fall across much of the country in June. Falling immigration over the coming months should drive rents lower still, especially in the largest cities, which tend to attract the most migrants.

Variable vs Fixed

Floating-rate market share at chartered banks slid from a relative high of 43% in March to 32% in May.

Big 5 Bank Outlook on B.O.C

New Bank of Canada rate forecasts are in: 

• RBC expects no more cuts holding at 2.75% through 2026, the most hawkish outlook. 
• Scotiabank revises its call lower to 2.50% (from 2.75%). 
• BMO Financial Group remains the most dovish, forecasting 2.00% by early 2026. 
• TD, CIBC & National Bank all see a 2.25% terminal rate 
• Capital Economics is calling for 2 more cuts this calendar year

Current Interest Rates

CONVENTIONAL

• 5 year fixed, 30 yr amortization – 4.44%
• 3 year fixed, 30 yr amortization – 4.39%
• 2 year fixed, 30 yr amortization – 4.84%
• 5 year variable, 30 yr amortization – Prime – 0.40% = 4.55%
• 5 year fixed, 25 yr amortization – 4.29%
• 3 year fixed, 25 yr amortization – 4.30%
• 2 year fixed, 25 yr amortization – 4.74%
• 5 year variable, 25 yr amortization – Prime – 0.50% = 4.45%

INSURED

• 5 year fixed, up to 30 yr amortization – 4.19%
• 4 year fixed, up to 30 amortization – 4.24%
• 3 year fixed, up to 30 amortization – 4.09%
• 5 year variable, up to 30 amortization – Prime – 0.75% = 4.20%

Fast Facts

• $103,172,872 – Amount Canadians have collectively lost to crypto investment scams so far this year, per the Canadian Anti-Fraud Centre. They are the top type of investment scam. 
• 87,543 – Challenges filed by Canadians to CRA assessments of their tax filings last fiscal year, a 35% increase from 2023. Taxpayers have historically been right in two-thirds of objections. 
• 84,371 – Loonie hot dogs that were eaten at the Toronto Blue Jays game on Tuesday night, setting a new record for the stadium. The sold-out crowd certainly came to eat. 
• $1.1 billion – What the federal government has spent on housing asylum seekers in hotels since 2017. Ottawa’s currently footing the hotel bills for 500 asylum seekers.