This morning, the Bank of Canada confirmed what had been widely anticipated for weeks as they cut their key interest rate by 0.25%.  This was the Bank’s sixth rate reduction in a row, bringing their total to 2.00% in decreases since they initiated the current rate-cutting cycle that began last June.  This latest move came as no surprise since Bank of Canada Governor, Tiff Macklem, made it clear last month that Canada’s Central Bank would be ‘gradually’ decreasing their key rate as they moved forward, all but assuring that a rate reduction at the inaugural interest rate meeting of the year would go back to the standard size of 0.25%.  This latest move bucks the jumbo-cut’ trend that was set at the last two Bank of Canada rate meetings which resulted in consecutive 0.50% reductions.

This now brings the bank's prime rate down to 5.20%, with most variable rate mortgage holders paying anywhere from 4.20% to 4.90%, depending on their discount to prime.

Anyone out shopping for a home that has an active pre-approval and was leaning towards the variable rate will now have a bit more purchasing power as their stress test just officially came down by a quarter percent.

The next Bank of Canada meeting is not until March 12th, and it will be very interesting to see how things play out between now and then.  Canada is facing the threat of tariffs from the US that could come as early as February 1st, and Canada’s response to the tariffs could end up being inflationary.  We wait anxiously to see if the tariffs are imposed, and if so, what our governments reaction to them will be.