On October 29, 2025, the Bank of Canada cut its target for the overnight rate by 0.25 percentage points to 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. It was the second cut in a row.
Bank of Canada policy rate, %
What the Bank said
- The economy contracted by 1.6% in the second quarter, while household spending grew at a healthy pace.
- Unemployment stayed at 7.1% in September.
- CPI inflation was 2.4% in September; underlying inflation is around 2.5%.
- The Bank projects GDP growth of 1.2% in 2025, 1.1% in 2026 and 1.6% in 2027.
- If the economy evolves in line with the forecast, the current rate is “about the right level.”
What it means for Calgary
The Bank has now cut its rate by 2.75 points since June 2024, from 5% to 2.25%. Its message suggests the easing cycle may be over, so buyers waiting for much lower rates may not get them soon. With four months of supply in September, Calgary buyers have both choice and lower borrowing costs this fall. The next decision is on December 10, 2025.
Compared with September
In September, the Bank cut to 2.5% because the economy had weakened and the upside risk to inflation had eased. In October it cut again, to 2.25%, and returned to publishing a full projection now that the effects of US trade actions are somewhat clearer. Unemployment held at 7.1%, the same as in August. CPI inflation rose from 1.9% in August to 2.4% in September, slightly higher than the Bank expected, and inflation excluding taxes was 2.9%. The Bank’s preferred core measures have been sticky around 3%, but it judges underlying inflation to be around 2.5% and expects CPI inflation to stay near 2%.
Bank of Canada GDP growth projection, %
The outlook
The Bank expects weak growth in the second half of 2025, with the hardest hits in autos, steel, aluminum and lumber. Rising consumer and government spending and residential investment should provide some support, and growth should pick up gradually as exports and business investment recover, with stronger quarterly growth in 2026. The labour market remains soft: September’s job gains followed two months of sizeable losses, and slower population growth means fewer new jobs are needed to keep the employment rate steady.
A signal of a pause
The Bank said that if the economy evolves broadly in line with its projection, it sees the current rate at about the right level to keep inflation close to 2% while helping the economy through a period of structural adjustment. It also said the trade conflict reduces the economy’s capacity and adds costs, which limits what monetary policy can do to boost demand.
What it means for Calgary buyers and sellers
Buyers now have lower rates and, in September, four months of supply. That is a rare combination: borrowing costs are lower and sellers have more competition. Buyers should not wait for much lower rates, since the Bank has signalled it may be done for now. Sellers may see a modest lift in interest this fall, but inventory will keep pricing competitive.
Local angle
Residential investment is one of the areas the Bank expects to support growth. In Calgary, CREB said on October 1 that resale markets face more competition from new homes and additional rental supply, which adds choice for buyers but also competition for resale sellers.
The global picture
The Bank projects global growth to slow from about 3.25% in 2025 to about 3% in 2026 and 2027. Activity in the United States has been strong, but employment growth has slowed and tariffs have started to push up consumer prices. The euro area is decelerating, and in China weaker business investment has offset the shift of exports to other countries. Oil prices have been fairly stable, and the Canadian dollar has depreciated slightly against the US dollar.
