On March 12, 2025, the Bank of Canada cut its target for the overnight rate by 0.25 percentage points to 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.
Bank of Canada policy rate, %
What the Bank said
- The economy grew 2.6% in the fourth quarter (Q4) of 2024, stronger than expected, with past rate cuts boosting consumption and housing.
- Unemployment fell to 6.6%, but job growth stalled in February.
- January CPI was 1.9%; inflation is expected to rise to about 2.5% in March as the GST/HST break ends.
- Uncertainty from changing US tariff threats is restraining consumer spending and business hiring and investment.
- “Monetary policy cannot offset the impacts of a trade war,” the Bank said.
What it means for Calgary
Borrowing costs are lower going into spring, and Calgary has more listings than in years. But tariff uncertainty can make buyers cautious, especially in an export-heavy province. The next decision is on April 16, 2025.
Compared with January
In January, the Bank cut to 3% and assumed no new tariffs in its forecast. Since then, tariffs imposed by the United States and heightened trade tensions have become the main story. In March the Bank said the Canadian economy entered 2025 in a solid position, with growth of 2.6% in the fourth quarter following upwardly revised growth of 2.2% in the third. But it expects first-quarter growth to slow as the trade conflict weighs on sentiment and activity.
Confidence and jobs
The Bank pointed to surveys showing a sharp drop in consumer confidence and a slowdown in business spending as companies postpone or cancel investments. Employment growth strengthened from November through January, and unemployment fell to 6.6%, but job growth stalled in February. The Bank said there are warning signs that trade tensions could disrupt the recovery in the job market.
Inflation
CPI inflation was 1.9% in January and is expected to rise to about 2.5% in March as the GST/HST break ends. The Bank’s preferred measures of core inflation remain above 2%, mainly because shelter price inflation persists. Short-term inflation expectations have risen on fears about the effect of tariffs on prices. The Bank said its job is to ensure that “higher prices do not lead to ongoing inflation.”
What it means for Calgary buyers
CREB reported 4,145 homes for sale in February and a benchmark price of $587,600, roughly 1% higher than a year earlier. With the policy rate now 2.25 points below its 5% level of last spring, borrowing costs and choice are both better than a year ago. The question for buyers is confidence: trade uncertainty may make some households wait.
What it means for sellers
Sellers are entering spring with more competition than in recent years. Lower rates help, but if confidence weakens, buyers may take longer to decide. Pricing in line with current listings is the best protection against a long time on market.
Practical takeaways
Buyers should get a pre-approval at today’s rates and build a budget that can absorb higher prices for everyday goods. Variable-rate borrowers see the cut in their payments first. The next decision is on April 16, 2025.
The global picture
The Bank said the US economy looks to have slowed in recent months, equity prices have fallen and bond yields have eased on expectations of weaker North American growth. Oil prices have been volatile and are trading below the assumptions in the January forecast, a point that matters for Alberta. A surge in exports ahead of tariffs partly offset slowing domestic demand, but that boost is unlikely to last.
Wage growth has also shown signs of moderation, the Bank said.
