The U.S. just reported that its core inflation—the sticky kind that strips out food and energy—has climbed back above 3% and is now rising at its fastest pace in six months. Normally, that would be a strong reason for the U.S. Federal Reserve to hold off on cutting rates. But this time, traders think the Fed will focus more on weakening job growth and still go ahead with a September rate cut.

Why should Calgary buyers care? Because Canadian inflation tends to follow U.S. trends—about 82% of the time, according to historical data. While the Bank of Canada doesn’t take marching orders from the Fed, it can’t fully ignore it either. If the Fed eases, it can influence global bond markets, which in turn can shift Canadian fixed mortgage rates.

Where the Bank of Canada Stands

The BoC is already well ahead of the U.S. on rate cuts, having lowered its policy rate by 125 basis points since the easing cycle began. That means the central bank has less urgency to follow the Fed’s lead. Unless Canadian inflation cools noticeably in the next month, the BoC is expected to hold steady at its September 17 meeting.

Here’s what markets are betting right now:

• Bank of Canada (Sept 17) – 30% chance of a 0.25% cut, 70% chance of no change.
• Federal Reserve (Sept 17) – 98% chance of a 0.25% cut.

If the Fed cuts and the BoC holds, it would narrow the gap between the two countries’ interest rates, which could strengthen the Canadian dollar. That would give the BoC a little more room to cut later without pushing up import prices (which can feed inflation).

Impact on Calgary Mortgage Rates

Right now, Canadian and U.S. bond yields have both ticked up, which puts mild upward pressure on fixed mortgage rates. Even if the Fed cuts, we’re unlikely to see a major drop in Canadian mortgage rates this year. At best, global bond-market movements might give fixed rates a slight nudge lower.

For Calgary buyers, the bigger opportunity isn’t in chasing lower rates—it’s in today’s market conditions. With inventory at pre-pandemic highs and sales slowing, buyers have more negotiating room than they’ve had in years.

Next Steps for Calgary Buyers

Don’t bank on a rate cut to suddenly make homes more affordable in 2025. Instead, focus on using the current buyer-friendly market to your advantage—whether that’s negotiating a better price, asking for favourable conditions, or securing incentives from sellers. If you’re ready and financially prepared, you could lock in a home before rates flatten out and market competition heats up again. Reach out to me to go over your specific circumstances and the options available to you.