On June 4, 2025, the Bank of Canada held its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%. It was the second hold in a row.
Bank of Canada policy rate, %
What the Bank said
- US tariffs are still well above their levels at the start of 2025, and trade negotiations are highly uncertain.
- Canadian GDP grew 2.2% in the first quarter, slightly stronger than forecast, boosted by exports pulled forward to the US and inventory build-up. Final domestic demand was roughly flat.
- CPI inflation eased to 1.7% in April as the end of the consumer carbon tax cut it by 0.6 points. Excluding taxes, inflation was 2.3%.
- Core inflation measures moved up, which was one reason to hold.
What it means for Calgary
Mortgage rates are not likely to fall quickly while the Bank waits for clarity on trade. In Calgary, where May supply was 2.6 months, buyers are not under pressure to rush. The next decision is on July 30, 2025.
Compared with April
The Bank also held at 2.75% on April 16, 2025, after seven cuts in a row that brought the rate down from 5% in June 2024. In April it chose to wait because US tariffs made the outlook unusually hard to read. By June, some tariffs had been raised and others lowered, China and the US had stepped back from their highest rates, and negotiations had started with several countries. The Bank still described uncertainty as high.
Key figures in the June 4 decision, %
Why the Bank held again
Two forces are pulling in opposite directions. The economy is expected to be considerably weaker in the second quarter as the rush of exports and inventory building reverses, and the labour market has softened, especially in trade-intensive sectors, with unemployment at 6.9%. That argues for lower rates. But inflation excluding taxes came in at 2.3% in April, slightly stronger than expected, core measures moved up, and many businesses say they plan to pass on the cost of tariffs. With the economy softer but not sharply weaker and some unexpected firmness in inflation, the Bank decided to hold while it gathers more information.
The Bank said it will watch how much US tariffs reduce demand for Canadian exports, how that spills over into investment, jobs and household spending, how quickly higher costs reach consumer prices, and how inflation expectations evolve. Housing activity in the first quarter was down, driven by a sharp contraction in resales.
What it means for Calgary buyers
A hold means variable-rate payments stay the same for now. Buyers with a pre-approval do not need to wait for a cut that may or may not come in July; in May, Calgary had 6,740 homes for sale and 2.6 months of supply, so the better leverage today comes from choice and negotiation, not from rates. Test your budget at a rate above your contract rate, as lenders must do under the stress test.
What it means for sellers and owners
Sellers should not count on lower rates to bring more buyers this summer. Owners renewing a fixed-rate mortgage taken out five years ago may still face a higher rate than they have now, and it is worth comparing lenders well before the renewal date.
Local angle
For Calgary, oil prices matter as much as rates. The Bank said they have fluctuated but remain close to their levels at the time of the April report. The Bank’s next decision, with a new Monetary Policy Report, is on July 30, 2025.
How the decision was framed
The Bank said it will continue to assess both the downward pressure on inflation from a weaker economy and the upward pressure from higher costs. Governing Council is proceeding carefully, and its stated aim is that Canadians keep confidence in price stability through this period of global upheaval while the Bank supports growth.
