The Prime Rate at major financial institutions (FI’s) will stay at 4.45%. The market was expecting this overwhelmingly (93.5% odds per LSEG Data Analytics). The BoC had indicated that the easing cycle was likely over in October and that the current rate was close to the right level to balance tempering inflation with keeping the economy moving. There are market experts who believe there will be no more rate cuts in 2026. Mortgage Logic feels that the Canadian economy is too weak and vulnerable for there not to be additional rate cuts in 2026. Again, the BoC finds itself in an unenviable position of being on the edge of spurring inflation even though the economy is not at full capacity, while losing some capacity.

There was a growth rate in the third quarter for the Canadian economy of 0.1%, improving from -0.4% in the second quarter. The annualized GDP growth in the third quarter, as stated by the BoC, was 2.6% while inflation was kept close to 2%, yielding a weak net annualized growth of 0.6%.

Canada’s economy will continue to struggle as long as federal government policy remains inhibiting and resistant to solid economic development policies that will unleash our strengths, especially in the resource sector. Productivity continues to be a key drag on the economy, which hampers value-added sectors, leading to the continued erosion of manufacturing and assembly operations in Canada.

Although 80% of our trade with the U.S. is protected under the USMCA agreement with the U.S. & Mexico, a docile, uninterested posture by the Canadian government is prompting the U.S. to talk about an early re-negotiation of the agreement. Looking elsewhere to trade is important, but should not negate the importance of assertively approaching the US to sort out issues now in the steel, aluminum, and lumber industries, never mind the auto industry. Weakness or waning allegiance to the U.S. will be exploited if Canada does not deal head-on with the U.S.

For the best advice and planning, contact us anytime at Mortgage Logic.