Bank of Canada (BoC) holds rates steady today. Acknowledges it cannot resolve trade uncertainty or mitigate effects of a trade war. Focus remains on maintaining price stability.

>Tone: Dominated by rising tariffs, uncertainty, and extreme market volatility.

>Canada: Economy slowing; employment down; wage growth softening.

>US: Signs of slowing growth; inflation expectations climbing.

>BoC outlook: Short-term inflation seen rising (tariffs/supply issues); longer-term expectations mostly stable. CPI drop expected in April due to carbon tax rebate.

>Inflation tension: Weaker demand is disinflationary; tariffs are inflationary—BoC monitoring how much gets passed to consumers.

>BoC focus: Watching tariffs’ impact on exports, business investment, employment, and household spending.

>>> My take: BoC didn’t cut due to tariff-driven uncertainty but has a dovish lean, signaling openness to rate cuts if risks persist.  US metrics increasingly unreliable—policy gap may widen further.

Next BoC: June 4, July 30

Fed: May 7 (88% chance of hold), then June 18  Wider CAD-USD rate gap = rising policy divergence risk

As expected, the Bank of Canada (BoC) drops its rate by another 0.25% today—but it admits it can’t fix the impact of the trade war.

> Tone of the announcement: In their own words: “more-than-usual uncertainty.”
> Consumer confidence is plunging > business slowdown, investment cancellations.An
> Housing: Past rate cuts boosted activity, but shelter inflation persists.
> Jobs: Hiring had momentum, but trade tensions threaten recovery.
> BoC’s balancing act: A weaker economy pushes rates down, but inflation pressures push them up.

> Strongest words from the BoC:
“Monetary policy cannot offset the impacts of a trade war. What it can and must do is ensure that higher prices do not lead to ongoing inflation.”

>>> My read: They’re focused on keeping inflation in check—suggesting no hikes ahead, but further cuts remain on the table.

Next BoC meetings: April 16, June 4
US Fed: March 19 (expected hold), then May 7 > Widening rate gap = more challenges ahead.

Bank of Canada (BoC) drops their rate by another 0.25%. It also announced the end of quantitative tightening and will gradually restart asset purchases.  This is telling. It’s a quiet signal that they’re wary of economic weakness, trade risks, and drifting further from the US Fed.

The Canadian dollar has depreciated materially against the US dollar, largely reflecting trade uncertainty and broader strength in the US currency. Bond yields tell two stories: US yields are up, driven by strong growth and sticky inflation. Canadian yields are down slightly, suggesting weaker economic momentum. Canadian business investment remains weak.

BoC released its latest forecasts today, but with trade tariffs on the horizon, a lot of it already feels outdated—like turning in an assignment when the questions just changed. Even they acknowledge this in their announcement:  “scope and duration of a possible trade conflict are impossible to predict.”

Wage pressures, though sticky, are easing. Shelter inflation is still high but gradually coming down. Inflation is tracking close to 2%, and the BoC expects it to stay near target over the next two years. Putting aside the tariff variable, this forecast makes further rate hikes less likely, as the BoC sees its target as met—or at least, they’d be cautious about cutting too fast.

Trade risks are the wild card. If GDP slows, the BoC may lean toward more cuts, but if tariffs push prices higher, they could hold off, creating uncertainty around future rate moves.

The BoC points out there have already been substantial cumulative rate cuts since last June. Lower interest rates are boosting household spending. Ends announcement with a strong statement:  “if broad-based and significant tariffs were imposed, the resilience of Canada’s economy would be tested.”

Next BoC meetings March 12, then April 16. US Fed announcement is later today (expected hold), next March 19. This widening gap between US and Canadian rates puts added pressure on the BoC. A weaker CAD and rising import costs could make BoC think twice before cutting further.

Bank of Canada (BoC) drops their rate by another 0.5%. Canadian dollar has depreciated in the face of broad-based strength in the US dollar. The recent unemployment rate rose, as employment continued to grow more slowly than the labour force. Wage growth showed some signs of easing, but remains elevated relative to productivity. The upward pressure on inflation from shelter and the downward pressure from goods prices have both moderated as expected.

GDP growth is weaker than projected. BoC acknowledged immigration, changes to mortgage rules, and temporary policies such as the GST suspension and stated “The Bank will look through effects that are temporary and focus on underlying trends to guide its policy decisions.” BoC’s statement appears to subtly critique the government’s temporary policy measures as economic window dressing, which lacks any meaningful economic impact.

BoC also noted increased uncertainty and clouded  economic outlook with the possibility of new tariffs on Canadian exports to US. The nod to potential US tariffs reveals Canada’s increasingly passive economic role, more passenger than driver.

Closing statement signals a definitive shift from the previous “wait and watch” approach to a clear path of rate reduction. “Going forward, we will be evaluating the need for further reductions in the policy rate one decision at a time.”

Next BoC meetings Jan 29 followed by March 12. US Fed will make their next rate announcement Dec 18, 2024.

Bank of Canada (BoC) drops their rate by 0.5%, ‘to support economic growth’.    Consumption has continued to grow but is declining on a per person basis. The labour market remains soft. Population growth has continued to expand the labour force while hiring has been modest. Wage growth remains elevated relative to productivity growth. Overall, the economy continues to be in excess supply. Residential investment growth is also projected to rise as strong demand for housing lifts sales and spending on renovations.  Inflation in shelter costs remains elevated but has begun to ease. Business and consumer inflation expectations have largely normalized.

BoC seems to have turned the corner and now projects a gradually strengthening economy, supported by lower interest rates, with any upward and downward pressures on inflation roughly balancing out.  While their language hints at additional reductions, they’re intentionally vague about the specific timeline.   “If the economy evolves broadly in line with our latest forecast, we expect to reduce the policy rate further. However, the timing and pace of further reductions in the policy rate will be guided by incoming information . We will take decisions one meeting at a time. ”

It will be interesting to see how this affects real estate, along with the recent changes in mortgage rules, particularly for first time home buyers.  BoC itself admits in today’s statement, “strong demand for housing to lift sales”. This could potentially lead to a return to a more competitive housing market, as the new mortgage affordability calculations may bring homeownership within reach for a cohort of buyers who have been waiting on the sidelines.

Next BoC meetings  Dec 11 followed by Jan 29.   US Fed will make their next rate announcement Nov 7, 2024, shortly after the US election.

As expected, Bank of Canada (BoC) drops their rate by 0.25%, for the third time this year. The labour market continues to slow. Wage growth, however, remains elevated relative to productivity. High shelter price inflation is still the biggest contributor to total inflation but is starting to slow. Inflation also remains elevated in some other services. Excess supply in the economy continues to put downward pressure on inflation. There are opposing forces on inflation which ‘Governing Council is carefully assessing’ .

Bank of Canada drops rate by 0.25%, 3rd time this year. Labour market slows, excess supply putting downward pressure. However, opposing forces elevated wage, high shelter costs, some other services. Next BoC meetings Oct 23, Dec 4. If assuming same pace, drop 0.25% x 2 by end year.

Bank of Canada (BoC) drops their rate by 0.25%, for the second time in a row. Household spending has been weak. There are signs of slack in the labour market. The unemployment rate has risen, job seekers taking longer to find work. Wage growth is showing some signs of moderating, but remains elevated.

Residential investment is expected to grow robustly. With new government limits on admissions of non-permanent residents, population growth should slow in 2025. Shelter price inflation remains high, driven by rent and mortgage interest costs, and is still the biggest contributor to total inflation.

BoC now expects reaching their 2% target next year. They acknowledge however there are opposing forces on inflation, notably shelter and some other services, which are holding inflation up. They will continue to ‘carefully assess’ this.

Next BoC meeting is Sept 4, 2024. US Fed will make their next rate announcement July 31, 2024. The Fed has yet to initiate their first rate drop.

Bank of Canada finally drops their rate by 0.25%. Inflation in most advanced economies continues to ease. The Bank’s preferred measures of core inflation suggest continued downward momentum. However, they state recent data suggest the economy is still operating in excess supply. Shelter price inflation remains high and housing activity increased. Wage pressures remain but look to be moderating gradually.

The closing statement paints their sentiment: “With continued evidence that underlying inflation is easing, Governing Council agreed that monetary policy no longer needs to be as restrictive and reduced the policy interest rate by 25 basis points. Recent data has increased our confidence that inflation will continue to move towards the 2% target.”

Canada is more sensitive to interest rate than the US, so today’s move before the US is understandable. The stage is set for further rate drops, however, slow and steady pace is more reasonable to expect over fast, drastic deep cuts.

Next BoC meeting is July 24, 2024. US Fed will make their next rate announcement June 12, 2024.

Bank of Canada maintains policy rate.  Inflation in most advanced economies easing gradually. US economy stronger than anticipated. Global oil prices have moved up.  In Canada,  labour market conditions continue to ease, unemployment rate has risen gradually, wage pressures are moderating.  However, shelter price inflation is still very elevated, driven by growth in rent and mortgage interest costs.

Looks like it is much about core inflation now,  which will drive the rate drop decision.   “While inflation is still too high and risks remain, CPI and core inflation have eased further in recent months. The Council will be looking for evidence that this downward momentum is sustained. Governing Council is particularly watching the evolution of core inflation”   Inflation rates are projected to reach central bank targets in 2025.  Next BoC meeting June 5, followed by July 24.    Next US Fed rate announcement is May 1, followed by June 12.

Bank of Canada maintains policy rate.  Global economic growth slowed. US GDP growth also slowed but remained surprisingly robust. Euro economic growth was flat. Equity markets have risen sharply.

Canada economy pace remained weak and below potential with a large decline in business investment.  Employment continues to grow more slowly than the population, and there are now some signs that wage pressures may be easing. CPI inflation has eased, however shelter price inflation remains elevated and is the biggest contributor to inflation.  The Bank repeated its concern of the persistence in underlying inflation, but it has dropped the mention of raising rates.  Today’s announcement is in line with the ongoing sentiment of pause and then most likely rate decrease.

Next BoC meeting is April 10, 2024.   US Fed will make their next rate announcement March 20, 2024.