Mortgage Rates Await the Fate of Trump's Tariffs
With United States President Donald Trump’s tariff policy continuing to cloud Canada’s economic outlook, mortgage rates remain in a two-year downtrend. Market participants are watching closely as uncertainty persists.
“Upward (inflation) momentum has dissipated,” said Bank of Canada Governor Tiff Macklem on Thursday, noting that the Bank’s preferred inflation measure is currently at 3.15 percent.
If Macklem’s assessment proves accurate, it could signal lower interest rate risks heading into 2026. However, the persistent failure of core inflation to reach the Bank’s two-percent target suggests rate cuts may pause for now.
Market Expectations
The bond market appears to share this cautious sentiment. Forward rates tracked by CanDeal DNA imply only a 15 percent chance of another Bank of Canada rate cut on December 10, with 2026 odds looking almost evenly split.
Author’s Summary
Canadian mortgage rates continue their decline amid Trump’s tariff uncertainties, while the Bank of Canada remains cautious as inflation stubbornly lingers above target.