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Is There a Bank of Canada Rate Cut on the Horizon?

August 11, 2025

Explore the Calgary housing market as rate cut speculation grows. Sales stabilize; Bank of Canada's September decision could impact mortgage rates.
Is There a Bank of Canada Rate Cut on the Horizon

By Josh Tagg, mortgage broker · Mortgages for Less with INDI Mortgage · Calgary, serving all of Alberta ·

The Calgary housing market has had a lot of speculation this year, especially since the tariff war started in the spring. One of the biggest indicators for change in interest rates has been the Bank of Canada rate announcements, the next of which is coming up on September 17. But what will the central bank do — cut rates, or hold steady?

The short answer: speculators are split, but most believe a rate cut isn’t a sure thing yet. Here’s what’s driving the debate.

Quick answer: As of August 8, 2025, markets gave the Bank of Canada a 28% chance of a 0.25% cut on September 17 and a 72% chance of holding at 2.75%. July’s jobs report showed 41,000 jobs lost, but inflation pressure from tariffs, energy costs and steady consumer spending kept the Bank cautious. A cut would lower variable-rate payments; fixed rates follow bond yields, so the decision was unlikely to cause a big swing for Calgary buyers.
What happened next: The Bank of Canada did cut on September 17, 2025, by 0.25% to 2.5%, despite the 72% odds of no change priced in here. By then unemployment had reached 7.1% in August and inflation had come in below the 2% target. Josh covered the decision in Bank of Canada Cuts Overnight Rate 0.25%.
28%
Odds of a Sept 17 cut (Aug 8)
2.75%
Policy rate markets expected to hold
−41,000
Jobs lost in Canada, July 2025
14.6%
Youth unemployment, highest since 2010 outside the pandemic

Is the housing market showing signs of life?

A man on a navy sofa holding a tablet, looking up at a wall calendar with one date circled in orange, beside a moving box.
September 17 was the next rate decision. In early August, most traders expected a hold.

Let’s start with the good news. After a rough start to 2025, the Canadian housing market is beginning to stabilize. In July, home sales in several major cities pointed to a national increase of around 6%. Federally, sales are now outpacing new listings, hinting that house prices may be finding a floor.

In Calgary, sales have remained steady while inventory has creeped up — but if rates do drop, demand could heat up again. However, this recovery is still fragile and depends on broader economic health.

Did the weak July jobs report change the outlook?

July’s employment report was disappointing, with 41,000 jobs lost across Canada, reversing much of June’s surprise gain. The decline was concentrated in youth unemployment (aged 15-24), which jumped to 14.6% — the highest since 2010 outside of the pandemic.

Economists agree this shows a softer economy, but most say it’s not enough on its own to push the Bank of Canada toward an immediate September cut. Inflation remains the bigger driver of the Bank’s decisions.

Why are inflation, trade and tariffs keeping the Bank cautious?

Even with weaker jobs data, several forces are keeping the Bank cautious about cutting rates too soon:

  • Tariffs and supply-chain disruptions are driving up prices on goods.
  • Consumer spending hasn’t slowed enough to bring inflation down quickly.
  • Energy costs are rebounding, adding pressure to household and business budgets.
  • Trade uncertainty with the U.S. is weighing on exports, with compliance issues under the CUSMA agreement causing further drag.

Meanwhile, major government spending on both sides of the border has bond markets worried about long-term borrowing costs — another reason the Bank might hold steady.

What are the markets saying about a September cut?

As of August 8, rate-watchers are giving the following odds for the September 17 meeting:

  • 28% chance of a 0.25% rate cut
  • 72% chance of no change

For context, a probability over 60% is usually considered a strong signal for action. That means most traders still expect the Bank to hold at 2.75% next month, barring any major surprises in the upcoming inflation and GDP reports.

What does this mean for Calgary home buyers?

If you’re shopping for a home in Calgary right now, the September announcement could slightly shift your mortgage rate — but it’s unlikely to be a huge swing unless the Bank surprises us with a cut.

  • Variable-rate borrowers could see a drop in payments as a result of a cut.
  • Fixed-rate borrowers are more influenced by bond yields, which may move ahead of the decision if markets sense a shift.

For now, keep an eye on the data coming in over the next few weeks. If inflation cools faster than expected, the odds of a cut could climb. But if prices remain sticky, the Bank may hold until later this year (October or December) or until 2026.

Calgary’s housing market is steadying for now, but economic uncertainty and inflation pressures make a September rate cut less than certain. If you’re ready to buy, it might make sense to lock in a rate soon. Reach out to talk with me about your specific circumstances and what options I think would best suit your goals.

How an Alberta mortgage broker helps around a rate decision

Rate announcements are hard to call. Your plan shouldn’t depend on guessing right:

  • A rate hold on your pre-approval, so you’re protected if fixed rates rise before you buy.
  • A clear look at variable vs. fixed: variable payments move with the Bank of Canada, fixed rates move with bond yields.
  • A budget that still works if the Bank holds longer than markets expect.
  • Rates shopped across multiple lenders for Calgary, Edmonton and the rest of Alberta.

Waiting on the next rate announcement?

Lock in a rate hold now and keep your options open either way.

Apply Online → Book a Discovery Call → Serving Calgary, Edmonton & all of Alberta · Mortgages for Less with INDI Mortgage

Questions about the September 2025 Bank of Canada decision

What were the odds of a Bank of Canada rate cut on September 17, 2025?
As of August 8, 2025, rate-watchers gave a 28% chance of a 0.25% cut and a 72% chance of no change. Since a probability over 60% is usually considered a strong signal, most traders expected the Bank to hold at 2.75%.
How many jobs did Canada lose in July 2025?
Canada lost 41,000 jobs in July 2025, reversing much of June’s surprise gain. Youth unemployment (aged 15-24) jumped to 14.6%, the highest since 2010 outside of the pandemic.
Why wasn’t the weak jobs report enough to force a cut?
Most economists said a softer job market on its own wasn’t enough to push the Bank toward an immediate September cut. Inflation remained the bigger driver of the Bank’s decisions.
What was keeping the Bank of Canada cautious about cutting?
Tariffs and supply-chain disruptions driving up goods prices, consumer spending that hadn’t slowed enough, rebounding energy costs, and trade uncertainty with the U.S. under CUSMA. Heavy government spending on both sides of the border also had bond markets worried about long-term borrowing costs.
How would a rate cut affect Calgary mortgage borrowers?
Variable-rate borrowers could see a drop in payments. Fixed-rate borrowers are more influenced by bond yields, which may move ahead of the decision if markets sense a shift.
Was the Calgary housing market recovering in summer 2025?
It was steadying. Nationally, July home sales pointed to an increase of around 6% and sales were outpacing new listings. In Calgary, sales remained steady while inventory crept up, but the recovery was still fragile.
Did the Bank of Canada cut rates on September 17, 2025?
Yes. The Bank of Canada cut its policy rate by 0.25% to 2.5%, despite markets giving a hold 72% odds in early August. Unemployment had reached 7.1% in August and inflation had come in below the 2% target.

This article was written on August 11, 2025, using market odds and economic data available at the time; the September 17, 2025 outcome was added later. Rates, market conditions and lender policies change. This is general information, not financial advice; please speak with a licensed mortgage professional about your specific circumstances. Mortgages for Less with INDI Mortgage.

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