With markets nearly split—pricing in a 40% chance of a rate cut and a 60% chance of a hold—the Bank of Canada’s upcoming rate decision on Wednesday is still very much up in the air.

And with fresh inflation data landing just one day before the announcement, Tuesday’s CPI report could be what ultimately tips the scales.

The central bank will announce its decision Wednesday morning, alongside a new Monetary Policy Report and revised forecasts.

While economists broadly agree that rates are headed lower over time, a cut this week is far from a sure thing as policymakers balance growing recession risks against still-sticky inflation.

Case for a cut: Tariffs, soft data, and a fragile outlook

RBC and Scotiabank both note that if not for escalating trade tensions with the U.S., the Bank likely would have held in March.

With those risks still elevated, RBC expects the BoC will “opt to add another ‘insurance’ 25-basis-point cut” to cushion against a possible downturn.

The central bank’s Q1 Business Outlook Survey revealed faltering sentiment, with hiring intentions at their lowest levels since the pandemic and one-third of firms now expecting a recession.

March’s jobs report also disappointed, showing a net loss in employment and a rising unemployment rate.

National Bank, however, sees a “temporary pause to assess” as the more likely outcome, noting that while soft indicators are weakening, hard economic data haven’t yet deteriorated in a meaningful way. Still, if current trends continue, NBC believes the next cut could come as early as the June 4 meeting.

Scotiabank’s Derek Holt, meanwhile, lays out the case for disinflation, pointing to a cooling job market, weaker commodity prices, and ongoing economic slack. It also warns that Canada could feel the ripple effects of a slowing U.S. economy, especially with trade barriers making it harder for Canadian exports to find buyers.

Case for a hold: Inflation risks and a cautious BoC

Even with the economy showing signs of strain, both Desjardins and Scotiabank say the Bank of Canada may choose to hold off on another cut—for now.

Desjardins points out that while rates are still expected to head lower, just how far they fall will depend heavily on how trade policy evolves.

“The direction of travel for interest rates is still lower, but where the policy rate troughs will be highly conditional on where trade policy settles,” Desjardins economists wrote.

Scotiabank sees persistent inflation as the bigger risk. The Bank’s preferred core inflation measures have continued to run hotter than expected—between 3.5% and 4% month-over-month on a seasonally adjusted annualized basis.

“These core measures have been persistently too hot straight back to last May,” says Holt. “Their persistence has tended to suggest that the BoC shouldn’t have been easing as much as it has to date, so it’s time to call time out.”

Tariff-related price pressures could also continue to feed into inflation in the months ahead, making the Bank even more cautious about cutting prematurely.

The takeaway

Whether the Bank cuts rates on Wednesday or not, the easing cycle appears far from over.

Markets still expect another 25 to 50 basis points of cuts this year, and many economists believe the next move could come as soon as June—especially if the incoming data continue to weaken.

As Scotiabank points out, what the Bank says about inflation, growth, and trade-related risks may be just as impactful as the rate decision itself.

BoC policy rate forecasts from the Big 6 banks

This article was written for Canadian Mortgage Trends by:

A new report says the national average asking rent in March was $2,119, marking the sixth straight month of year-over-year declines.

By Sammy Hudes

On a month-over-month basis, rents rose 1.5% from February, the first increase since last September.

Urbanation president Shaun Hildebrand said renters were more active in March than they’d been in recent months, likely thanks to improvements in affordability.

“However, rents are likely to continue facing downward pressure in the near-term due to the expected negative economic impact and job losses caused by the trade conflict with the U.S.,” he said in a press release.

The report said average asking rents in Canada are still 17.8% higher than they were five years ago when the COVID-19 pandemic hit in March 2020.

Purpose-built apartment asking rents declined 1.5% from a year ago to an average of $2,086, while asking rents for condominium apartments fell 3.8% to $2,232.

Ontario recorded the steepest rent declines, with combined apartment and condo rents falling 3.5% to an average of $2,327 in March, followed by Quebec’s 2.5 per cent decrease to $1,949.

B.C. saw a slight 0.6% decrease in average asking rents to $2,480 while Alberta’s average ask was down 0.4% to $1,721.

Saskatchewan led the way for year-over-year rent growth, at three per cent, to an average of $1,336, followed by Nova Scotia at 2.4% to $2,199 and Manitoba at two per cent to $1,592.

This report by The Canadian Press was first published April 8, 2025.

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