Today the Bank of Canada (BoC) has decided to stay the Key Rate at 2.75%.  The Prime rate with major Financial Institutions should remain at 4.95%. 

Inflationary conditions persist, as Canada does not deal with U.S. tariff impositions head-on.  Carney’s “Elbows up” approach is not working for Canada.  Resolving trade issues with the U.S. should be paramount in the Canadian government’s playbook.  The tariffs imposed have exposed the weaknesses of the Canadian economy, including an underutilized, underdeveloped energy sector that desperately needs to build pipeline to get its products to more markets than just the U.S.  Furthermore, the U.S. trade tariffs have exposed the decades-old unresolved inter-provincial trade barriers that have been endlessly hampering commerce and wealth generation within Canada.  Quite simply, Canada has been caught flat-footed, and the U.S. has lost patience with Canada’s favored and special treatment in their trade relationship.  The unfortunate fact is that Canada’s economy is akin to a fly on the rear end of an elephant when comparing it to either the U.S. economy or the world economy.  Canada must be assertive in wanting to deal with the U.S. to get a trade agreement that is good for both.  The U.S. administration is more eager to advance trade talks with much bigger economies in the world, such as the E.U.

Immigration has been out of control in Canada in the latter years of the Trudeau government.  It has been the highest per capita of all the Western Economies, even compared to legal U.S. immigration.  The skill sets (or lack thereof) of new immigrants have been watered down in comparison to traditional immigration practices in pre-Trudeau era regimes.  The sheer volume of immigrants is over-stressing the Canadian economy, and especially the housing market, creating home prices that have become out of reach for the average Canadian.  If interest rates are cut – as they eventually will be- it will just apply more pressure to increase home prices. 

Lack of action by the new Carney government does not bode well for a better standard of living and a stronger economy for all.  The Canadian dollar remains weak, and as this announcement was made, it sank even further.  This just causes inflation to push higher as imported goods cost more. 

In summary, there is not much good news for Canadians and the Canadian economy. Inaction by our new Prime Minister will just exacerbate this situation.

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