Are you ready for the Sept 4th Bank of Canada Rate Announcement?
As of Sept 4th Canada’s prime lending rate is now 6.45%!
The Sept 4th rate announcement has been kind to us – variable rate holders, rejoice! This is means you are saving another $15/100k on your mortgage. (That’s like, one kids worth of school supplies for a $500k mortgage.)
Recent economic indicators show many positive trends, including inflation in decline. Statistics Canada reported a 2.5 per cent increase in the Consumer Price Index (CPI) for July, down from 2.7 per cent in June. Additionally, the Canada Federation of Independent Business’ forecasts suggest the Canadian economy grew by 2 per cent in Q2 on the heels of a 1.7 percent growth in Q1. Despite these improvements, the housing market in British Columbia remains under strain. A recent survey by the Angus Reid Institute highlighted that unaffordable housing is driving potential homebuyers out of the province.
This is consistent with data from BC Stats, which shows that the cost of homeownership increased by 7.2 per cent and rental costs rose by 7.1 per cent last quarter. Inflation in BC also remains higher than the national average, placing second among the provinces only behind New Brunswick.
What do the big banks think about inflation?
- TD Economics: “On inflation, we have been arguing that the fundamentals of inflation were calling for interest rate cuts since the beginning of 2024. Our initial preference was for the easing cycle to commence in April, so in some respects, Canada is in catch-up mode.” (Source)
- RBC Economics: “CPI prints, although still important to the BoC’s consideration, are backward-looking and lag the economic backdrop that has continued to soften. The 2.1% annualized increase in Q2 GDP was above the 1.5% gain that the BoC expected in the July MPR but still left per-capita output down for the seventh in the last eight quarters.” (Source)
- Desjardins: “The danger now is that the Bank of Canada falls behind the curve if policymakers remain too focused on the slightly above-target inflation. Following previous tightening cycles, central banks have often responded too late to signs of economic deterioration.” (Source)
What are the big banks forecasting?
The following are the latest interest rate and bond yield forecasts from the Big 6 banks, with changes from earlier this year in parentheses.
Want to see previous interest rate annoucements from 2024?
Want to see when the annoucements are in 2025?
Want to read the release directly from the Bank of Canada themselves?
