Bank of Canada rate decision: hold expected as trade war and inflation collide
The longer the trade dispute runs, the greater the possibility of future Bank of Canada rate cuts. That is especially true if tariffs begin to weigh on Canadian exports, business investment, employment, and overall economic growth.
“The Bank may need to lower rates to support the economy even with inflation running warm,” David said.
The housing market faces similar uncertainty. David warned that trade disruption could prompt buyers and sellers to adopt a wait-and-see approach – a dynamic already weighing on Canada’s housing market outlook.
“We saw a similar dynamic when tariffs were first introduced,” he said. Canadian home sales fell 9.8 percent month-over-month in February 2025. That was the largest monthly decline since May 2022, as buyers pulled back from the market.
For mortgage brokers, the September 2 Bank of Canada rate decision is unlikely to produce a surprise. The bigger question is what follows – and how long the trade war continues to shape the answer.
