On March 20th, the Governor of the Bank of Canada delivered a speech that gave us a clearer picture of what’s on the horizon for the Canadian economy—and what it could mean for interest rates and mortgages.
If you don’t have an hour to watch the whole thing, here’s a quick and easy summary of the key takeaways.
The Big Picture: A Strong Finish, A Shaky Start
We wrapped up last year in a pretty good place. Inflation was easing, interest rates had started to come down, and the economy was showing signs of healthy growth.
But now, we’re facing a new challenge: U.S. tariffs on Canadian exports.
These new tariffs are already impacting major sectors, and they’re creating serious uncertainty about what comes next.
Which Canadian Sectors Are at Risk?
Here’s a breakdown of who could feel the impact the most:
- Oil sector (Alberta): New tariffs on oil could lead to reduced revenues and slower investment.
- Farmers (Prairies): Products like canola are now facing higher trade barriers, increasing costs and limiting market access.
- Manufacturing (Ontario and Quebec): Tariffs on steel and aluminum could slow down production and growth in these key sectors.
What makes it worse is the unpredictability. The U.S. keeps adjusting its stance, which makes it hard for Canadian businesses—and policymakers—to plan ahead.
The Bank of Canada’s Role
The Bank’s main focus remains the same: Keep inflation under control without adding more pressure on households and businesses.
The Governor mentioned that they are listening closely to feedback from Canadians and will continue adjusting their approach with care.
In simple terms: They’re paying attention, but they don’t have a crystal ball either.
What About Interest Rates?
This part’s important—especially if you have a mortgage.
🔹 Variable Rates: Right now, the Bank is expected to hold rates steady at its next announcement on April 16th. But if inflation starts to rise again, they’ve made it clear they won’t hesitate to raise rates to keep it in check.
🔹 Fixed Rates: Here’s some good news: we’ve seen some small fixed-rate decreases over the past week. That’s encouraging for anyone looking to buy, renew, or refinance.
Another interesting factor: The removal of the federal carbon tax from consumer prices could reduce inflation by about 0.5%, which might ease pressure on the Bank to hike rates.
What Should You Do Now?
If you’re a homeowner or planning to become one, here are a few tips:
- If you have a variable-rate mortgage, keep an eye on inflation and upcoming Bank of Canada updates.
- If you're shopping for a fixed-rate mortgage, you might be able to take advantage of lower rates right now.
- If you’re unsure how this impacts your situation, reach out—I’m happy to help you understand your options.
Final Thoughts
The economic outlook is a bit foggy right now, especially with trade tensions and unpredictable policies south of the border. But the Bank of Canada is proceeding cautiously, and we’re here to help you do the same.
If you want to talk through how these changes might impact your mortgage or buying plans, feel free to contact me directly. It’s always better to plan ahead than react later.