Canada Prime Rates

(Effective March 13) The Prime Rate declined to 4.95% after the Bank of Canada reduced its policy rate by 25 basis points to 2.75%.

Headline inflation has been below the Bank of Canada’s (BoC) 2% target in five of the last six months. However, core inflation remains above target, with the BoC’s preferred measure at 2.7%. The BoC has been lowering its policy rate over the past half year to engineer a soft landing for the Canadian economy. But this time, it lowered its policy rate to counter the effects of trade uncertainty.

The Bank of Canada lowered its policy rate again

• Canada is facing the possibility of an unprovoked trade war with its largest trading partner, the resulting economic uncertainty and potential export losses could push the Canadian economy into a recession.
• Reduced trade activity, weaker business confidence, and potential job losses may further dampen growth, making the outlook increasingly fragile.
• Thus, the Bank of Canada (BoC) had to lower its policy rate into a stimulative range to counteract the economic slowdown. If trade tensions escalate and recession risks materialize, the BoC could accelerate rate cuts to support growth, encourage borrowing, and stabilize employment

The Bank of Canada lowered its policy rate while it is nervous about the inflationary effects of tariffs.

The Prime rate in Canada is currently 4.95%. The Prime rate is the interest rate that banks and lenders use to determine the interest rates for many types of loans and lines of credit. These can include credit cards, HELOCs, variable-rate mortgages, car and auto loans, and much more. If you have any of these loans, changes in the prime rate will also change your debt payments and thus your GDS and TDS ratios.