The Bank of Canada (BoC) will announce its next interest rate decision on Wednesday, April 16. While many investors expect rates to stay the same, I believe a cut is not only possible—it’s necessary. Here’s why, and what it could mean for homeowners and buyers in Ottawa and across Ontario.
Where We Stand Now
The BoC’s policy rate is currently 2.75%, which is considered “neutral”—not stimulating the economy, but not slowing it either. To boost demand, the Bank would likely need to drop it closer to 2.00%. After seven consecutive rate cuts, another move this week seems likely.
Why a Cut Makes Sense
- The Job Market is Slowing
Canada lost 33,000 jobs in March—the first monthly drop in more than three years. One-third of Canadian businesses now expect a recession within the next year. - Consumer Confidence is Falling
Worries about jobs and finances mean Canadians are spending less. That slows the economy further, which makes a rate cut helpful. - Inflation is Up, but Manageable
Canada’s CPI hit 2.6% in March, slightly above the 2% target. The Bank allows a range of 1–3% to handle shocks like trade issues. Deputy Governor Timothy Lane has said slower progress toward the target is acceptable if it helps financial stability—perfect reasoning for a small cut now.
Disinflationary Trends Are Emerging
- Oil prices are near 4-year lows
- Carbon tax changes may lower fuel costs
- A stronger Canadian dollar makes U.S. imports cheaper
- Falling mortgage rates ease housing costs
- Wage growth is slowing, which limits price pressure
What This Means for Mortgage Rates in Ottawa and Ontario
Variable-rate mortgages could see relief if the BoC cuts. Fixed rates, however, have already been rising due to higher U.S. bond yields caused by global trade tensions.
- 5-year Government of Canada bonds rose 0.40% last week
- Lenders are adjusting fixed rates upward in response
- Variable rates are less attractive as discounts shrink
What Should Homeowners and Buyers Do?
- Breaking a fixed mortgage? Make sure the savings beat any penalties.
- Renewing this year? Don’t accept the first offer; shop around.
- Buying this spring? Get pre-approved to lock in today’s rate before fixed rates rise further.
My Take: Expect a 0.25% Cut
The economy is weakening, consumer confidence is falling, and inflation is set to cool. I expect the BoC will cut its rate by 0.25% this week.
If you’re in Ottawa or elsewhere in Ontario and wondering how this impacts your mortgage, reach out. Whether you’re buying, renewing, or refinancing, a smart mortgage strategy could save you thousands.
