After three straight holds, markets are betting big on a quarter-point cut, bringing the policy rate down to 2.5%. But this isn’t a straightforward call—new inflation data, shifting tariff policies, and government spending plans are all in play.
Inflation Surprise Lands at the Last Minute
On Tuesday, Statistics Canada drops its August inflation report, giving the BoC one final data point before Wednesday’s announcement. Economists expect CPI to rise to 2.0% from July’s 1.7%, with food and energy prices pushing higher. Retaliatory tariffs—like those on Florida orange juice—have kept grocery costs sticky, though Ottawa’s September decision to roll many of those back should ease price pressure moving forward.
A Weak Economy is Forcing the Bank’s Hand
Canada’s GDP shrank by 1.6% in Q2, and economists warn we’re “teetering on a recession.” With over 100,000 jobs lost since July and unemployment climbing to 7.1%, labour market weakness is spreading well beyond trade-impacted sectors. Add in slower business investment and trade uncertainty, and it’s clear the economy is struggling to find its footing.
Why a Cut Looks Likely
Analysts at Oxford Economics and TD Economics say the case for a rate cut has strengthened. Not only has inflation stayed tame, but the jobs market and trade environment have deteriorated quickly. Both firms now expect two quarter-point cuts—one this week, and another in October—bringing rates to 2.25%, the lower end of the BoC’s “neutral” range where policy is neither too hot nor too cold for growth.
Risks Still Linger
The BoC faces a tricky balancing act. An upside inflation surprise could keep policymakers on the sidelines, while Ottawa’s fall budget—expected to mix austerity with big capital spending on defence and infrastructure—may provide extra economic support. And with the U.S. trade war shifting constantly, officials are wary of over-committing to aggressive easing they may have to reverse later.
Why Lendworth is a Great Idea in Times Like These
When the economy shifts, uncertainty creates both risk and opportunity. That’s where Lendworth steps in.
- ✅ Flexible lending solutions: Whether you’re a first-time buyer, investor, or business owner, we provide mortgage and financing options that adapt to changing rates.
- ✅ Asset-backed investments: Our mortgage investment corporation offers Canadians the ability to earn consistent, risk-adjusted returns backed by real estate, even when markets are volatile.
- ✅ Trust and transparency: At Lendworth, compliance, security, and investor confidence aren’t afterthoughts—they’re our foundation.
With interest rates expected to move lower, opportunities in real estate and private lending are opening up. Partnering with Lendworth means you’ll have a trusted guide in navigating Canada’s housing and investment landscape—no matter where the economy heads next.
What This Means for Canadians
For homeowners, buyers, and investors, even a modest cut will bring some relief. Lower borrowing costs could ease mortgage payments, support housing demand, and give businesses a bit more room to invest. But don’t expect a free-fall in rates—economists stress the BoC will remain cautious and pragmatic.
The bottom line? Canada’s economy is fragile, inflation is under watch, and policy is shifting. A rate cut this week looks like a near-certainty—but the real story is how much further the BoC is willing to go. And with Lendworth by your side, you can turn market uncertainty into opportunity.
✨ Ready to take advantage of shifting rates?
Whether you’re exploring mortgage solutions or looking for strong, real estate–backed investments, Lendworth is here to help you move forward with confidence.
📞 Contact us today at lendworth.ca to discover how we can support your goals in this changing market.