Bank of Canada Rate Decision: September 17, 2025 Forecast – Will the Overnight Rate Finally Drop?

Here’s a look at why the Bank of Canada is likely to reduce interest rates for tomorrow's rate announcement, and what it means for you.

Why a cut is on the table

1) Inflation is back near target (and softening under the hood).
August CPI came in at 1.9% year-over-year, below expectations and essentially at the Bank’s 2% midpoint. Ex-gasoline CPI eased to 2.4%, while the Bank’s preferred core measures (CPI-median and CPI-trim) held around 3.1% and 3.0% and have been edging down. Markets took that as “permission” for a cut. 

2) Growth has rolled over.
Q2 GDP contracted at a –1.6% annualized pace, much weaker than Q1 and consistent with the Bank’s July outlook that flagged tariff headwinds and soft exports. That combo screams “slack” building in the economy. 

3) The labour market is loosening.
Canada lost 66,000 jobs in August and the unemployment rate climbed to 7.1%, the highest since 2016 (pre-pandemic). That’s the kind of broad-based cooling central bankers watch when deciding to ease. 

4) The balance of risks has shifted.
BoC’s own surveys show most market participants see a negative output gap, i.e., demand running below potential, tilting the risk toward doing too little rather than too much on rate relief. Bank of Canada

5) Markets and forecasters are (loudly) leaning cut.
After the August inflation report came out, the chances of a quarter-point rate cut jumped, and many big banks started predicting the Bank of Canada would begin lowering rates again after pausing over the summer. The U.S. Fed has also started to cut rates, but Canada’s slowdown makes the case even stronger here. 

What this could mean for Edmonton buyers & sellers

• Buyers: Fixed rates move with bonds and have already been shifting in this direction. A BoC cut primarily affects variable rates, HELOC rates, along with other revolving loans. If the feds decide to cut rates, qualification pressure eases a hair, and variable-rate holders get a little payment relief. If you’ve been on the sidelines, waiting for the rates to start to cool, momentum is slowly shifting your way.
• Sellers: Don’t expect fireworks overnight. One cut doesn’t create a bidding war. But lower carrying costs support demand into fall, especially for well-priced, move-in-ready homes. Your edge remains presentation + pricing discipline, and I’ll tell you if you’re above market; sugar-coating doesn’t sell houses.

My playbook if the cut happens tomorrow

• Rate-watch & pre-approval refresh: If you’re in the market this fall, and its been a while since your initial pre-approval, then it’s time to get a refresh to see if anything has changed for you.
• Variable vs. fixed check-in: Discuss Variable vs. Fixed rates with your lender to determine the best course of action.
• Timing listings: If you’re listing, let’s get you on the market and in front of any buyers looking to get ahead of the buyer crowd.
• Negotiation posture: Buyers, leverage the softer macro backdrop; If you have been on the fence, waiting for lower interest rates, now might be the time to proceed. If this is the start of a trend heading into the next year, now might be the time to "get ahead of the crowd" and take advantage of today's home prices. Sellers, anchor to real comps, not last spring’s wish prices. It is still comparative to list your home at the price that will sell it today, not based on yesterday’s (spring) prices. I’ll back you with data either way.

At the end of the day, if the Bank of Canada cuts rates, it’s not cause for a celebration, it’s a signal to re-strategize. Lower borrowing costs are nice, but it’s still your game plan that determines whether you win in this market.

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