Mortgage Blog
Bank of Canada Rate Announcement - October 29, 2025
October 29, 2025 | Posted by: Crescent Mortgage Corp.
With ongoing weakness in the economy and inflation expected to remain close to its target, the BoC reduced its target for the overnight rate by 25 bps to 2.25%
While the global economy remains resilient in the face of historic US tariffs, the impact is becoming clearer. The global economy is projected to slows from about 3.25% this year to around 3.00% in 2026 and 2027.
During the second quarter Canada’s economy contracted by 1.6%, driven down by falling exports and weak business investment. At the same time, household spending grew at a healthy rate. US trade policies and the resulting uncertainty are having severe impacts on specific sectors including autos, steel, aluminum, and lumber. As a result, GDP growth is expected to be weak for the second half of 2025. Canada’s labour market remains soft as the unemployment rate remained at 7.1% in September and wage growth slowed.
The BoC predicts GDP will grow by 1.2% this year, 1.1% in 2026 and 1.6% in 2027. Growth is expected to strengthen in 2026 after a weak second half of this year. CPI inflation came in at 2.4% in September, slightly higher than the anticipated. The BoC’s preferred core inflation measure continues to hover around 3%. The BoC expects inflationary pressures to ease over the next few months and CPI inflation to remain near 2%.
If inflation and economic activity evolve as expected the BoC envisions the current policy rate to be at the right level to keep inflation close to 2% while also assisting the economy through this period of uncertainty. Should the outlook change, they are prepared to respond appropriately. The BoC remains focused on ensuring that Canadians continue to have confidence in price stability through this period of global transition.
The next interest rate announcement is scheduled for announcing December 10, 2025.