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U.S. Inflation is Heating Up—Impact On Calgary Home Buyers

August 13, 2025

Discover how U.S. rate cuts impact Calgary's housing market. With high inventory and slowing sales, seize the chance for better deals now.
Canadian and American Inflation and Big Bank Rates

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

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.

Quick answer: In August 2025, U.S. core inflation rose back above 3%, but markets still gave the Fed a 98% chance of a 0.25% cut on September 17 and the Bank of Canada only a 30% chance. A Fed cut can nudge Canadian bond yields, and fixed mortgage rates follow bond yields, but no major drop in Calgary mortgage rates was expected in 2025. The bigger opportunity for Calgary buyers was the market itself: inventory at pre-pandemic highs and slower sales meant more room to negotiate.
What happened next: On September 17, 2025, the Fed cut by 0.25% as expected, and the Bank of Canada also cut by 0.25% to 2.5%, beating the 30% odds priced in when this was written. The cut lowered variable rates; the 5-year bond yield, which drives fixed rates, barely moved. Josh covered the decision in Bank of Canada Cuts Overnight Rate 0.25%.
3%+
U.S. core inflation, fastest in six months
82%
How often Canadian inflation follows U.S. trends
125 bps
Bank of Canada cuts since easing began
98%
Odds of a Fed cut on Sept 17

Where does the Bank of Canada stand compared with the Fed?

A couple at a kitchen table looking over a paper receipt, with a laptop showing a rising line chart, a coffee mug and house keys.
Canada had already cut 125 basis points by August 2025, so the Bank of Canada felt less pressure to match the Fed.

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).

Will a Fed rate cut lower 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.

What should Calgary buyers do next?

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.

How an Alberta mortgage broker helps when rates are uncertain

You can’t control what the Fed or the Bank of Canada does next. You can control how ready you are:

  • A rate hold on a pre-approval, so a jump in bond yields doesn’t change your budget mid-search.
  • A plain comparison of fixed vs. variable for your situation, since the two react to different forces.
  • Help using a buyer-friendly market: knowing your numbers before you negotiate price, conditions or incentives.
  • Rates shopped across multiple lenders for Calgary, Edmonton and the rest of Alberta.

Buying in Calgary while rates are on hold?

Get pre-approved so you can negotiate on price while sellers are motivated.

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

Questions about U.S. inflation and Calgary mortgage rates

Why does U.S. inflation matter to Calgary home buyers?
Canadian inflation tends to follow U.S. trends about 82% of the time. The Bank of Canada doesn’t take orders from the Fed, but if the Fed eases it can influence global bond markets, which in turn can shift Canadian fixed mortgage rates.
What did markets expect from the Fed and the Bank of Canada on September 17, 2025?
In August 2025, markets gave the Federal Reserve a 98% chance of a 0.25% cut. The Bank of Canada had a 30% chance of a 0.25% cut and a 70% chance of no change.
Why was the Bank of Canada less likely to cut than the Fed?
The Bank of Canada was already well ahead of the U.S., having lowered its policy rate by 125 basis points since the easing cycle began, so it had less urgency to follow the Fed’s lead.
Would a Fed cut lower Canadian fixed mortgage rates?
Not by much. Canadian and U.S. bond yields had both ticked up, putting mild upward pressure on fixed rates. At best, global bond-market movements might give fixed rates a slight nudge lower; a major drop in 2025 was unlikely.
How could a Fed cut help the Bank of Canada later?
If the Fed cuts and the Bank of Canada holds, the gap between the two countries’ rates narrows, which could strengthen the Canadian dollar. That gives the Bank of Canada more room to cut later without pushing up import prices.
What should Calgary buyers focus on instead of rate cuts?
Today’s market conditions. With inventory at pre-pandemic highs and sales slowing, buyers had more room to negotiate price, ask for favourable conditions or secure incentives from sellers.
What did the Bank of Canada actually do on September 17, 2025?
It cut its policy rate by 0.25% to 2.5%, and the Fed also cut by 0.25%. The cut lowered variable rates, while the 5-year bond yield that drives fixed rates barely moved.

This article was written on August 13, 2025, using market odds and inflation 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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