Bank of Canada’s First Interest Rate Update of 2025: What to Expect
The Bank of Canada (BoC) will deliver its first interest rate update of the year on Wednesday, January 29, 2025. This announcement will include a rate decision, a monetary policy report, and detailed commentary.
Background: Interest Rate Trends
The BoC’s last rate adjustment on December 11, 2024, lowered its key interest rate from 3.75% to 3.25%. The decision was influenced by rising unemployment, which hit 6.8%, the highest level since 2015, excluding the pandemic years.
In 2025, economic uncertainty remains high due to ongoing tariff threats from the U.S. and recession concerns. Inflation, now at 1.8%, has also impacted forecasts for monetary policy.
Expert Predictions for January 29
Many experts anticipated a rate hold, but recent developments suggest the BoC may announce another 0.25% rate cut.
Mortgage expert Penelope Graham explained, “The combination of below-target inflation and growing recession risks may push the Bank toward further cuts.” She added that maintaining economic stability would remain a priority.
The language in this week’s announcement may hint at the BoC’s strategy for managing potential economic shocks.
Mortgage Implications
A potential rate cut could affect mortgage rates for Canadians. Here’s an example:
- Scenario: A homeowner with a $627,854 mortgage (4.45% variable rate) would see their rate decrease to 4.20% after a 0.25% cut.
- Result: Monthly payments would drop from $3,458 to $3,371, saving $87 per month or $1,044 annually.
Graham advises mortgage shoppers to secure pre-approvals and lock in current rates, as market volatility could shift pricing.
Key Dates for BoC Updates in 2025
To stay informed, note these key BoC announcement dates for the year:
- January 29, 2025: Rate update, monetary policy report, and commentary
- March 12, 2025: Rate update only
- April 16, 2025: Rate update, monetary policy report, and commentary
- June 4, 2025: Rate update only
- July 30, 2025: Rate update, monetary policy report, and commentary
- September 17, 2025: Rate update only
- October 29, 2025: Rate update, monetary policy report, and commentary
- December 10, 2025: Rate update only
Announcements are typically released at 9:45 a.m. For updates, follow the BoC’s official X (formerly Twitter) account or subscribe to email notifications.
Looking Ahead
With significant economic challenges on the horizon, the BoC’s decisions in 2025 will play a critical role in shaping Canada’s financial stability. Homeowners and investors should stay informed and prepare for possible shifts in borrowing costs.
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