Residential Market Commentary - Economy Sluggish, but Stable

  • First National Financial LP

Statistics Canada and the Bank of Canada have launched the new year with a pair of significant economic reports.

As expected the central bank held its Policy Rate steady at 2.25%.  It is the second consecutive hold on the trend-setting rate.

Right now, volatile U.S. tariff and trade policies, and the upcoming review of the CUSMA trade deal are making it difficult to predict future moves.  The BoC is not sure how long the pause will last or which direction rates will go once they start to move again.  But the Bank says it will act if the economic outlook changes significantly.

“The current policy rate remains appropriate, conditional on the economy evolving broadly in line with the outlook we published,” said Bank Governor Tiff Macklem.

Separately, Statistics Canada released the country’s gross domestic product figures for November.  The overall number was virtually unchanged compared to October (-0.02%).  StatsCan says declines in goods producing industries were offset by gains in services.  Again, trade turmoil with the United States was cited as the ongoing problem.

The report also projected that December GDP growth will be a modest 0.1%.  That, combined with the flat performance in November, suggests GDP for the fourth quarter will likely decline by 0.5%.

StatsCan is forecasting Canada’s full year economic growth will come in at 1.3% for 2025.

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