Bank of Canada Holds Key Interest Rate at 2.75%

Bank of Canada Holds Key Interest Rate at 2.75% Amid Global Uncertainty

On June 4, 2025, the Bank of Canada announced that it will keep its key interest rate steady at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.

Why the Hold?

Global trade tensions—particularly between the U.S. and China—remain high, with ongoing tariff changes creating economic uncertainty. Although global markets have stabilized since April’s financial turmoil, uncertainty around U.S. policy continues to impact global growth.

What’s Happening in Canada?

• Canada’s economy grew 2.2% in the first quarter, slightly better than expected, thanks to strong business investment and a surge in exports ahead of U.S. tariffs.

• Consumer spending slowed, housing activity dropped, and unemployment rose to 6.9%, especially in sectors tied to trade.

• Inflation eased to 1.7% in April, mainly due to the removal of the federal carbon tax. However, underlying inflation remains slightly stronger than expected.

What’s Next?

The Bank is taking a wait-and-see approach. With inflation pressures still present and economic growth expected to slow in the second quarter, policymakers are holding the rate steady while monitoring:

• The impact of U.S. tariffs on Canadian exports

• Changes in consumer prices due to rising costs

• Business and household responses to economic uncertainty

Looking Ahead

The next interest rate announcement is scheduled for July 30, 2025, when the Bank will also release its updated Monetary Policy Report.

Bottom line: The Bank of Canada is being cautious, aiming to support growth while keeping inflation in check during a turbulent global trade environment.

 

If you have any questions about how these rates affect the value of your home or your selling or buying options, give us a call! 905.335.4102 | info@roccasisters.ca