Bank of Canada Rate Announcement Jun 4th, 2025

Tanya Toye • June 4, 2025

Bank of Canada holds policy rate at 2¾%.

FOR IMMEDIATE RELEASE

June 4, 2025

The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.

Since the April Monetary Policy Report, the US administration has continued to increase and decrease various tariffs. China and the United States have stepped back from extremely high tariffs and bilateral trade negotiations have begun with a number of countries. However, the outcomes of these negotiations are highly uncertain, tariff rates are well above their levels at the beginning of 2025, and new trade actions are still being threatened. Uncertainty remains high.

While the global economy has shown resilience in recent months, this partly reflects a temporary surge in activity to get ahead of tariffs. In the United States, domestic demand remained relatively strong but higher imports pulled down first-quarter GDP. US inflation has ticked down but remains above 2%, with the price effects of tariffs still to come. In Europe, economic growth has been supported by exports, while defence spending is set to increase. China’s economy has slowed as the effects of past fiscal support fade. More recently, high tariffs have begun to curtail Chinese exports to the US. Since the financial market turmoil in April, risk assets have largely recovered and volatility has diminished, although markets remain sensitive to US policy announcements. Oil prices have fluctuated but remain close to their levels at the time of the April MPR.

In Canada, economic growth in the first quarter came in at 2.2%, slightly stronger than the Bank had forecast, while the composition of GDP growth was largely as expected. The pull-forward of exports to the United States and inventory accumulation boosted activity, with final domestic demand roughly flat. Strong spending on machinery and equipment held up growth in business investment by more than expected. Consumption slowed from its very strong fourth-quarter pace, but continued to grow despite a large drop in consumer confidence. Housing activity was down, driven by a sharp contraction in resales. Government spending also declined. The labour market has weakened, particularly in trade-intensive sectors, and unemployment has risen to 6.9%. The economy is expected to be considerably weaker in the second quarter, with the strength in exports and inventories reversing and final domestic demand remaining subdued.

CPI inflation eased to 1.7% in April, as the elimination of the federal consumer carbon tax reduced inflation by 0.6 percentage points. Excluding taxes, inflation rose 2.3% in April, slightly stronger than the Bank had expected. The Bank’s preferred measures of core inflation, as well as other measures of underlying inflation, moved up. Recent surveys indicate that households continue to expect that tariffs will raise prices and many businesses say they intend to pass on the costs of higher tariffs. The Bank will be watching all these indicators closely to gauge how inflationary pressures are evolving.

With uncertainty about US tariffs still high, the Canadian economy softer but not sharply weaker, and some unexpected firmness in recent inflation data, Governing Council decided to hold the policy rate as we gain more information on US trade policy and its impacts. We will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs.

Governing Council is proceeding carefully, with particular attention to the risks and uncertainties facing the Canadian economy. These include: the extent to which higher US tariffs reduce demand for Canadian exports; how much this spills over into business investment, employment and household spending; how much and how quickly cost increases are passed on to consumer prices; and how inflation expectations evolve.

We are focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. We will support economic growth while ensuring inflation remains well controlled.

Information note

The next scheduled date for announcing the overnight rate target is July 30, 2025. The Bank will publish its next MPR at the same time.

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Employment and Mortgage Qualification: What Lenders Look For

By Tanya Toye • September 30, 2026

When you apply for a mortgage, your employment history and status carry a lot of weight. Even if you feel secure in your job, lenders need proof that your income is reliable and will continue. To them, your employment status is one of the strongest indicators of whether you can make your mortgage payments long term. Here’s how lenders typically view different employment situations: Permanent Employment This is the gold standard. Once you’ve passed any probationary period and hold permanent status, lenders see you as a lower risk. It shows that your employer is committed to you, and your income is steady. Probationary Periods If you’re still on probation—usually 3 to 6 months, though sometimes longer—lenders may hesitate. That’s because your employer can end your contract without cause during this period. Once probation is over, you’re considered more secure. That said, context matters. If you’ve worked with the same company for years as a contractor and just transitioned into full-time employment, lenders may accept a letter from your employer confirming that probation is waived. Documentation is key here. Parental Leave Being on or about to take parental leave doesn’t mean you can’t qualify for a mortgage. As long as you have a letter from your employer guaranteeing your position and return-to-work date, lenders can use your regular salary—not your leave income—when assessing your application. Term Contracts This is one of the trickiest categories. Even highly skilled professionals with strong incomes can face challenges here. A term contract has a start and end date, which makes lenders question the stability of your future income. To use term-contract income, lenders generally want to see at least two years of history, or proof that your contract has already been renewed. The more evidence you can show of consistent employment, the stronger your case will be. The Bottom Line If you’re planning to apply for a mortgage, it’s important to understand how your employment status could affect your approval. Whether you’re starting a new job, coming back from leave, or working under contract, lenders want documentation that proves your income is reliable. 📞 If you’ve recently changed jobs or are planning a career shift, let’s connect. I can help you prepare your file so you qualify with confidence and avoid surprises in the approval process.

Homeowner Credit is Becoming Part of the Longer-Term Financial Conversation

By Tanya Toye • September 29, 2026

Credit has traditionally been viewed as something you use for a specific purpose: buying a home, financing a major purchase or covering an unexpected expense. But with higher living costs, slower economic conditions and less financial flexibility, credit is increasingly becoming part of a longer-term financial conversation. That doesn’t mean taking on debt indefinitely or relying on borrowing to solve every financial challenge. But it’s important to understand the tools available and the necessity of making thoughtful decisions about when and how credit may fit into your broader financial plan. A Fresh Take on Credit In many ways, households are beginning to approach financial management with more of a business mindset. Businesses regularly evaluate cashflow, consider available sources of financing and balance immediate needs against longer-term objectives. They don’t necessarily borrow simply because credit is available. They consider why they need the funds, what the financing will cost and how it fits into their overall strategy. The same thinking can be useful for homeowners. When household budgets are under pressure, the question isn’t always, “How can I avoid using credit?” It may also be, “What options are available and do any of them make sense for my situation?” That could mean refinancing, consolidating certain debts, using a home equity line of credit or considering another form of financing. The appropriate option depends on your circumstances, objectives and ability to manage the associated costs. Home Equity May Be Part of the Conversation For homeowners who have built significant equity, your home can represent an important financial resource. That’s one reason I’m seeing more openness to conversations about reverse mortgages. A reverse mortgage isn’t appropriate for everyone, and it shouldn’t be viewed as a simple solution to financial challenges. For the right homeowner and in the right circumstances, however, it may provide access to home equity and improve cashflow without requiring you to sell or move. The important thing is understanding how the option works, what it costs and how it affects your broader financial picture. Credit Requires Discipline Regardless of the type of credit being considered, having a plan is essential. Before taking on additional borrowing costs, it’s worthwhile understanding why you need the funds, how much is appropriate, the overall cost of borrowing and how your longer-term repayment or exit strategy looks. Credit can provide flexibility when financial circumstances are changing. But its value comes from using it intentionally and responsibly – as one part of a larger plan designed to support financial stability and resilience. The goal isn’t simply to borrow more – it’s to understand your options and make credit work within a financial strategy that makes sense for you. Let’s talk about how you may be able to leverage credit to your advantage. Contact Tanya: 604-788-8693 | tanya@tanyatoye.ca