Bank of Canada Rate Decision: What Really Goes Into it?

Sep 10

3 min read

Bank of Canada building symbolizing the upcoming September 17 rate decision and its impact on mortgages, buyers, and investors.

Mark your calendars: September 17th is the next big Bank of Canada (BoC) rate announcement. For homeowners, buyers, and investors, these meetings can feel like waiting for exam results — will rates go up, down, or stay the same?

But here’s the thing: these decisions aren’t random. The Bank of Canada looks at a handful of big clues — like pieces of a puzzle — to figure out where the economy is headed. Let’s break it down in plain English.

📈 Inflation: The Price-Tag Problem

Think of inflation as the cost of groceries, gas, and everyday life. If prices are rising too quickly, the Bank raises rates to cool things down — like turning down the heat on a boiling pot.

Right now: Inflation has eased from its peak, but it’s still sticky in some areas (like rent and food). The Bank is watching closely to make sure it doesn’t flare up again.

👷 Jobs Report: Who’s Working?

The job market is like the scoreboard for the economy — and August wasn’t a winning month.

Canada lost about 65,500 jobs, the second monthly drop in a row.
The unemployment rate climbed to 7.1%, the highest we’ve seen (outside the pandemic) since 2016.
Wages ticked up slightly, but that was the only silver lining.

Right now: The economy looks like it just rolled an ankle. Not enough to call off the whole season, but definitely enough to get the coach’s attention.

🌎 Global Factors: We’re Not in a Bubble

Canada doesn’t make decisions in isolation. Oil prices, U.S. Federal Reserve moves, and global growth all feed into the Bank’s choices — kind of like checking the weather forecast before planning a road trip.

Right now: The U.S. economy is still strong, oil prices are steady, and global markets are watching inflation just like we are.

Now the Odds of a Rate Cut Are Rising

Imagine you’re guarding a garden. If plants are wilting (job losses, cooling economy), you might water more (cut rates). That’s what many experts are thinking right now:

Big banks like BMO and Scotiabank are leaning toward a 25-point cut, expecting the overnight rate to drop to 2.5%.
But others—like RBC—say the Bank may hold off this time.

Bottom line: the chances of a rate cut are up sharply, but both outcomes—cut or hold—are still on the table.

What It Means For You: Cut or Hold? Here’s Your Playbook

1. If the Bank cuts rates...

Variable-rate mortgages: Your payments could drop slightly—like snagging a surprise coupon at the grocery store.
Fixed-rate shoppers or early renewers: You might be able to lock in a lower rate on a new mortgage before the market catches up.

2. If the Bank holds…

We expect the tone to be downbeat (a nod to future cuts), meaning variable rates stay steady (not going up), and fixed rates remain manageable.
In either case, stability can be your friend, especially when planning your budget.

Swivel’s Insights: What’s Our Best Bet by Sept 17?

We think it’s a tight 55/45 swing toward a 25-bp cut. If not now, then very likely at the October meeting.

Quick Guide: What to Do Next

What You’re Doing	What a Cut Could Mean	What a Hold Could Mean
Renewing	Lower payments—slightly easier on your budget	Payments stay the same, but future cuts are likely
Buying now or soon	If pre-approved, you lock in a better rate	Still good—most pre-approvals include a fixed rate hold
Investing or considering a move (ON/AB)	Better borrowing costs improve cash flow chances	Stability helps you plan, especially with tools like renewals and amortization strategies