The Bank of Canada didn’t rock the boat this time. As expected, it kept its key interest rate steady at 2.75% — but it’s what they said next that’s turning heads.

For the first time in months, the central bank opened the door to rate cuts, hinting that if inflation keeps slowing, Canadians could see some relief before summer’s over. That subtle shift in tone has economists and mortgage watchers buzzing.

“The data’s finally giving the Bank a bit of breathing room,” said one Toronto-based broker. “This could be the start of a softer landing.”

With core inflation now sitting near 2.2%, the Bank’s long-time target of 2% is finally within reach. And markets have taken notice — traders are now betting on a possible rate cut as early as July 30, or at the very least, by early fall.

What This Means If You Have a Mortgage

If you’re on a variable-rate mortgage, your payments aren’t changing just yet. But if a cut does come later this summer, you might finally see a little wiggle room in those monthly costs.

For anyone shopping for a mortgage, this pause is worth paying attention to. Shorter-term fixed rates or hybrid options might give you more flexibility if rates do head south later this year.

And if you’re still holding out for those “back to 3%” rates? Experts say don’t count on it just yet. Most five-year fixed rates are still hovering around 4.84% to 5.49%, depending on your lender and credit.

📊 BoC Rate vs Core Inflation — 2022 to 2025

Year

BoC Rate

Core Inflation

2022

1.00% → 4.25%

5.3%

2023

4.50% → 5.00%

3.6%

2024

5.00% → 3.50%

2.8%

Mid-2025

2.75%

2.1%

This table tracks the Bank of Canada (BoC) interest rate against core inflation between 2022 and mid-2025. The BoC rate peaked at 5.00% in its inflation-fighting phase, then gradually declined to 2.75%. Core inflation eased from 5.3% to 2.1%, nearing the BoC’s 2% target.

🔺 2022: Inflation spikes to 5.3%, BoC hikes aggressively.
📈 2023: Rates hold around 5%, inflation begins to fall.
🔻 2024: Inflation slows; BoC starts easing rates.
🔍 Mid-2025: Rates at 2.75%, inflation near 2.1% target.

These trends suggest more interest rate cuts could follow. For mortgage holders and buyers, now’s the time to consider locking in a flexible strategy that aligns with a falling-rate environment.

📉 How a 0.25% Rate Cut Impacts Monthly Mortgage Payments

This visual shows how much Canadian homeowners can save monthly when mortgage rates dip by even 0.25%. For a typical $500,000 mortgage over 25 years, here’s what the shift looks like:

5.25%

$2,976

5.00%

$2,902

4.75%

$2,828

📌 At 5.25%: ~$2,976/month
📉 At 5.00%: ~$2,902/month → $74/month saved
📉 At 4.75%: ~$2,828/month → $148/month saved

Over a 5-year term, that’s a potential savings of $4,400–$8,800, just from a quarter or half-point drop in your rate. Timing your renewal or refinance could make a major difference.

Whether you’re renewing soon or buying your first home, it’s a smart time to consult a mortgage expert and align your strategy with expected rate movements.