By Unity Financial Services – Montréal, Québec
On September 17, 2025, the Bank of Canada (BoC) announced a new policy move: it lowered its key overnight lending rate by 25 basis points, bringing it down to 2.50% — the lowest level in nearly three years.
This decision marks the first rate cut in six months and signals growing concerns about the Canadian economy. Let’s break down why the central bank acted, what the cut means, and how it may impact your finances here in Québec.
📉 Why Did the Bank of Canada Cut Rates?
Several key factors influenced the BoC’s decision:
- Rising unemployment – Canada lost more than 100,000 jobs over the past two months, pushing unemployment to its highest level in almost a decade (outside of the pandemic years).
- Weak GDP growth – The economy contracted by around 1.5% in Q2, with Q3 outlooks looking weak due to lower exports and slowing business investment.
- Cooling inflation – While inflation is still near the top of the BoC’s 1–3% target range, it has eased thanks in part to tariff removals and softer consumer spending.
- Global uncertainty – U.S. trade tensions, supply chain risks, and slower population growth add to downside pressure.
In short: the economy is slowing, and the Bank of Canada wants to stimulate growth.
📊 The New Rates
| Rate Type | New Rate |
|---|---|
| Overnight Target Rate | 2.50% |
| Bank Rate | 2.75% |
| Deposit Rate | 2.45% |
The cut was unanimous among the BoC’s Governing Council, showing strong consensus on the need to support the economy.
🏡 How Will This Rate Cut Affect You?
1. Homeowners & Mortgages
- Variable-rate mortgages: Monthly payments may go down slightly, easing household budgets.
- Fixed-rate mortgages: No immediate change, but future renewals could see lower offers if cuts continue.
2. Borrowers & Consumers
- Lines of credit, car loans, and personal loans could become cheaper.
- Easier access to credit may help families manage rising costs.
3. Businesses
- Small businesses in Québec may benefit from lower financing costs for equipment, payroll, or expansion.
- This could stimulate investment — if consumer demand holds steady.
4. Savers & Investors
- Savings accounts and GICs may see slightly lower returns.
- Investors may look to equities and real estate for better yields.
🚨 Risks to Watch
While lower rates help borrowers, there are risks:
- Housing market pressure – Cheaper borrowing could increase demand, putting upward pressure on home prices in Montréal and across Québec.
- Sticky inflation – If prices climb again, the BoC may pause or reverse cuts.
- Job market uncertainty – If unemployment continues to rise, even lower rates may not be enough to boost spending.
🔮 What’s Next?
The Bank of Canada has left the door open for further cuts if economic risks worsen. The next rate decision will be announced on October 29, 2025.
Markets are already speculating about another 25-point reduction before the end of the year, depending on inflation and labour market trends.
✅ Final Takeaway
The Bank of Canada’s September 2025 rate cut to 2.50% is designed to support a slowing economy, but its effects will be felt differently by homeowners, consumers, and businesses. For many, this is a chance to save on debt costs, but it’s also a reminder to plan carefully in uncertain times.
At Unity Financial Services, we help individuals and businesses navigate these shifts — from reviewing mortgage strategies to managing debt, payroll, GST/QST, and tax planning.
📞 Call us today at 438-701-3770 to learn how you can make the most of this rate environment and protect your financial future.