As your local mortgage expert, I always aim to keep you informed about the economic forces that shape your borrowing power. On July 30th, 2025, the Bank of Canada (BoC) made its latest rate announcement, choosing to hold the overnight rate at 2.75% for the third consecutive time. This decision comes during a period of economic uncertainty marked by ongoing global trade tensions, particularly around tariffs.

To bring you the most accurate analysis, I’m drawing from the brilliant work of Dr. Sherry Cooper, Chief Economist at Dominion Lending Centres. Her insights help us understand how national policy decisions impact everyday Canadians like you.

📉 Why Rates Are Holding Steady

According to Dr. Cooper, while the BoC has made seven rate cuts over the past year, it’s now taking a more cautious approach. The uncertainty around US-Canada trade negotiations and global tariffs is putting downward pressure on growth and nudging inflation expectations higher.

Canada’s economy has shown resilience, but we’re not out of the woods:

– Consumer and business sentiment is still low, though improving.

– The unemployment rate ticked up slightly to 6.9%, with losses mainly in trade-sensitive sectors.

– Underlying inflation has increased, hovering around 2.5%, largely due to non-energy goods like shelter.

The BoC believes this inflation rise may be temporary, thanks to a stronger Canadian dollar and more modest labour cost growth. Still, they’re keeping a close eye on the balance between economic headwinds and inflation risks.

🔍 What Could Happen Next?

Dr. Cooper outlines two potential paths:

– If tariffs ease: We could see improved growth and lower inflationary pressure.

– If tariffs escalate: The economy could slow more sharply, forcing the Bank’s hand on rate policy.

Canada experienced strong growth in early 2025 as businesses rushed to beat potential tariff hikes. But as expected, Q2 looks to show a contraction, and Q3 may follow, bringing forecasted annual growth to 1.2%.

🏠 What Does This Mean for Mortgages?

For borrowers, the big question is whether the BoC will cut rates again. Dr. Cooper projects that another rate cut to 2.5% could occur before year-end if inflation slows and economic growth stalls, as expected.

This is particularly relevant for:

– Variable rate mortgage holders – a future rate cut could lower your payments.

– First-time buyers – stable or falling rates could improve affordability.

– Renewals – now may be a great time to review your options if your term is ending in the next 6–12 months.

Even though the US Federal Reserve is expected to hold, Canada’s unique economic conditions could justify one more cut—despite broader global uncertainty.

🧠 My Take

This is a great example of how macroeconomics trickles down into our daily financial lives. Whether you’re buying, renewing, or just watching the market, staying informed helps you make smarter choices. As always, I’m here to help break it all down and find the best mortgage fit for your needs.

If you’re wondering how this news might affect your plans, feel free to reach out. Let’s have a conversation about what works best for you—because your mortgage should fit your life, not the other way around.

Special thanks to Dr. Sherry Cooper for her continued insights and leadership in Canadian economic reporting.
Original publication: “Bank of Canada Holds Rates Steady as Tariff Clouds Linger” (Dominion Lending Centres, July 30, 2025).
Link: https://dominionlending.ca/economic-insights/bank-of-canada-holds-rates-steady-as-tariff-clouds-linger