The Bank of Canada has announced a reduction in its target for the overnight rate to 2.75%, with the Bank Rate set at 3% and the deposit rate at 2.70%. Prime lending rate is currently at 5.20%. Following the Bank of Canada’s recent decision to lower its target rate 1/4 percent, commercial banks will likely adjust their prime lending rates accordingly to 4.95%. These adjustments typically occur shortly after changes in the central bank’s policy rate.

According to the Bank, ongoing trade tensions are expected to dampen the strong GDP growth seen in the latter half of 2024. However, predicting the extent of the slowdown remains challenging due to uncertainties stemming from a rapidly changing policy environment. On the inflation front, the Bank anticipates a slight increase above its 2% target as the GST tax break concludes, while core inflation is expected to stay above 2%, driven primarily by persistently high shelter costs.