Every few months, the Bank of Canada makes an announcement that directly impacts everything from mortgage rates to business decisions to household budgets. On April 16, the Bank chose to hold its overnight lending rate steady, which means the prime rate remains unchanged, at least for now.

In a time when the economy feels a little shaky and the headlines can be hard to keep up with, knowing what this decision really means (and what might come next) can help you feel more prepared and informed. Whether you're a homeowner, investor, or just trying to make smart choices with your money, staying informed is a great first step.

The next update will come on June 4, 2025, but in the meantime, let’s take a closer look at what’s behind this latest decision and what it could mean for you moving forward.

What’s Behind the Decision?

The Bank is walking a delicate line, responding to a complex blend of domestic pressures and global risks:

Unemployment has climbed to 6.7%, the highest level since the pandemic.
Confidence among consumers and businesses is softening.
Escalating global trade tensions—especially with new U.S. tariffs—are dampening activity.
Inflation came in at 2.3% in March, slightly lower than February but still above the 2% target.
Spending and investment have weakened, as households and businesses take a cautious stance.

These signs collectively suggest the Bank is adopting a “wait-and-see” approach, carefully monitoring economic trends before making any major policy shifts.

What Could Happen Next?

In its April Monetary Policy Report, the Bank of Canada outlined two potential scenarios for how the economy might evolve over the coming months. The first scenario assumes that the impact of new U.S. tariffs is temporary. In this case, we could see a short-term slowdown in growth, but inflation would remain close to the Bank’s 2% target. The second scenario is more severe: if the trade conflict is prolonged, there’s a real risk of a recession taking hold in 2025, with inflation rising above 3% by 2026.

While these outcomes vary, they both highlight the same key point: uncertainty remains high.

The Global Picture

The U.S. economy is cooling, with rising inflation expectations and business unease.
Europe continues to struggle with industrial slowdown.
China’s economy, while strong in late 2024, is now showing signs of fatigue.
Oil prices have dipped since January, reflecting softer global demand.
The Canadian dollar has strengthened, largely due to U.S. dollar weakness.

These global dynamics ripple into the Canadian economy, reinforcing the Bank’s cautious stance.

What This Means for You

The Bank of Canada’s cautious approach means there’s no immediate change to borrowing costs, but it’s a smart time to review your financial plans. Staying adaptable will help you navigate the uncertainty ahead. Here’s what to keep an eye on:

A rate cut could still happen later this year, but for now, stability remains the Bank’s top priority.
Global uncertainty and new tariffs may continue to put upward pressure on prices in the coming months.
Balancing economic support with inflation control will remain a key focus for policymakers.
Reviewing your mortgage strategy, investment plans, and financial goals now can help you stay in a strong position, even as conditions shift.

Key Takeaways at a Glance:

The prime rate holds steady, with no immediate changes to borrowing costs.
Unemployment rises to 6.7%, the highest since the pandemic.
Inflation eases slightly to 2.3%, but pressures remain.
Trade tensions and tariffs could impact the economic outlook.

The Value of Staying Informed and Seeking Guidance

With the unpredictable nature of the global economy, staying informed is more important than ever. Economic conditions, such as changes in inflation or shifts in the job market, can directly affect everything from interest rates to household budgets. While the Bank of Canada’s decision provides some stability, the ongoing uncertainty means that decisions made today could have long-term implications.

If you’re unsure about how these changes could impact your personal finances, speaking with a financial advisor can provide clarity. Whether it’s reassessing your investment strategy, preparing for potential mortgage rate changes, or exploring ways to optimize your savings, professional advice can help ensure you’re making informed choices in the current financial landscape.

Moving Forward with Confidence

Even though the rate decision offers some stability, uncertainty remains part of the bigger economic picture. Global trade tensions, inflation trends, and shifts in consumer and business confidence will all continue to influence the months ahead.

Uncertainty can be unsettling, but you don’t have to navigate it alone. If you have questions about your mortgage, renewal, refinance, or how to protect your goals in a shifting landscape, we’re here to help. Reach out to us, Cultivate Evolve + financial.