Will the Bank of Canada cut rates again next month?

Mortgage markets remain on edge as uncertainty surrounding US trade policy and inflation data fuels bond market volatility, leaving Canadian borrowers in limbo over where rates are headed next. 

Despite economic data pointing in conflicting directions, markets are now pricing in just a 50-50 chance of another Bank of Canada (BoC) rate cut at its next meeting on March 12—a direct result of President Donald Trump’s unpredictable tariff threats, according to mortgage strategist Robert McLister. 

As bond yields continue to react to shifting economic signals, mortgage pricing remains highly sensitive to market movements. This week saw mixed changes in fixed mortgage rates, with some uninsured rates dropping, while certain insured rates moved higher: 

Uninsured mortgage rate changes: 

• Two-year fixed: Down 15 basis points to 5.29% 

• Four-year fixed: Down 5 basis points to 4.54% 

• Five-year fixed: Down 5 basis points to 4.39% 

Insured mortgage rate changes: 

• Three-year fixed: Up 17 basis points to 4.04% 

• Five-year fixed: Up 9 basis points to 3.94% 

The latest round of hotter-than-expected US inflation data has added to the uncertainty, with some analysts even floating the possibility of Federal Reserve rate hikes, a scenario that seemed off the table just months ago. 

“Reported US inflation was so steamy that some commentators even started talking about Federal Reserve rate hikes. And even if it’s too early for that speculation, bond yields—which drive fixed mortgage pricing – have run higher on less in the past,” McLister noted for the Financial Post. 

Since bond yields directly impact fixed mortgage rates, any sustained increase in US yields could put upward pressure on Canadian mortgage costs, even if the Bank of Canada eventually moves forward with rate cuts. 

Adding to the uncertainty is Trump’s ongoing unpredictability on trade policy. Markets had previously anticipated at least one more BoC rate cut in the first half of 2025, but Trump’s tariff threats have thrown those expectations into doubt. 

McLister said rate direction remains at the mercy of Trump’s cryptic tariff whims, making it increasingly difficult to predict short-term mortgage pricing. 

For borrowers, this uncertainty underscores the importance of securing a rate hold while shopping for a mortgage, regardless of expectations about future rate cuts. 

“The mortgage market is like a magician’s hat – rabbits, doves and the best mortgage deals can disappear in a poof,” McLister said. 

Source CMP
By Candyd Mendoza