Many Canadians breathed a sigh on June 5 when the Bank of Canada (BoC) lowered its key interest rate to 4.75%.
This was the central bank’s fourth update of 2024. Not only was it the first rate cut in more than four years, but it also came after six long rate holds at 5% (since July 2023).
Each year, the BoC publishes four such updates, and now we’re squarely in the middle. Experts and aspiring homebuyers are split about the next announcement, slated for July 24.
However, with some cautious optimism, there’s no denying a new hope has bloomed about further rate cuts coming, and it originates from something happening outside the True North.
The Bank of Canada building in Ottawa (Gary A Corcoran Arts / Shutterstock.com)
New Consumer Price Index (CPI) data released on July 11 showed that inflation slowed to 3% in June. Mortgage brokerage Ratehub.ca told Daily Hive this has renewed expectations of rate cuts in our southern neighbour, which, in turn, increases the likelihood of the same in Canada.
Penelope Graham, mortgage expert at Ratehub.ca, said these numbers give Canada’s central bank “further reassurance that inflation is trending in the right direction.”
“While the BoC has already made its first rate cut ahead of the US Federal Reserve, the rising likelihood the American central bank will be in the position to do so soon will support further downward movement on rates in Canada without the risk of shocking our currency,” she told Daily Hive in an email.
Graham shared that bond markets are reacting favourably to Thursday’s news, which has put downward pressure on fixed mortgage rates.
“Should this persist into next week, rate shoppers can expect to see additional discounts from lenders on their fixed-rate options,” she added. “Canada’s own June CPI report comes out on July 16. Should this show another downward trend in inflation, it will further bolster the chance of a cut on July 24.”
Before the latest US CPI data came out, more doubts about a rate cut floated in the Canadian market because May CPI data (2.9% rise) showed higher numbers than April (2.7% rise).
The latest Canadian CPI data for June, released Tuesday, shows another 2.7% rise.
“This improvement in the US CPI has stoked new optimism that the BoC will be in a cutting mood – and those hopes will only strengthen should we get good news on July 16, when Canada’s own June inflation numbers come out,” Graham said.
Keep up with BoC announcement dates
The BoC’s announcements alternate between pure interest rate updates and rate updates in conjunction with monetary policy reports and commentary.
The last one on June 5 was a plain rate update. The Bank is expected to release a rate-and-report combo on July 24, too.
If a cut is not announced, the BoC’s commentary should help squash or strengthen hopes for a leaner overnight rate in the future.
Those keen on staying on the pulse of the market should follow the Bank’s X account and look at morning updates on the following dates:
| July 24 | Interest rate announcement and Monetary Policy Report |
| September 4 | Interest rate announcement |
| October 23 | Interest rate announcement and Monetary Policy Report |
| December 11 | Interest rate announcement |
Keep up with what experts think about Canadian markets and upcoming interest rate updates on Daily Hive.