Key Highlights

• On October 29, 2025, the Bank of Canada introduced Overnight rate reduced to 2.25%, Bank Rate at 2.5%, deposit rate at 2.2%. 

• Canada’s GDP contracted 1.6% in Q2 2025, impacted by falling exports and weak business investment. 

• Household spending and residential investment rise, but affordability and labor shortages constrain growth. 

• Unemployment remains elevated at 7.1% in September, with slower wage growth. 

• Inflation remains near 2%, within the Bank’s target range. 

• Bank signals that the current rate is appropriate, with further changes dependent on economic conditions. 

What Changed in Today’s Announcement?

• Rate cut by 25 basis points to 2.25% 

• Bank Rate at 2.5%, Deposit Rate at 2.2% 

• Decision aims to support economic activity amid structural trade impacts 

• Emphasis that the current rate is suitable for maintaining inflation near 2% 

How This Affects Renters & Landlords: Impact on Rent Prices

Renters:

• High borrowing costs mean fewer people can buy homes, keeping rental demand high. 

• Expect competition for rental units in major cities, keeping prices elevated. 

• Renting may remain the more affordable or flexible option for many Canadians. 

Landlords / Investors:

• Elevated investment costs may slow new construction, limiting supply growth. 

• Tenant demand remains strong, offering stable rental income opportunities. 

• Residential investment is increasing, but structural economic challenges remain. 

Global and Domestic Economic Context

Global Economy:

• Global growth is expected to slow from 3.25% in 2025 to 3% in 2026–2027. 

• U.S. economy remains strong, supported by AI investment, but tariffs are raising prices. 

• Eurozone growth is slowing; China sees weaker business investment but exports to other countries are helping offset losses. 

• Global financial conditions easing; oil prices relatively stable; Canadian dollar slightly weaker. 

Canada’s Economy:

• GDP contracted 1.6% in Q2 2025, mostly due to weak exports and investment.  
• Household and government spending rising, residential investment improving. 
• GDP projections: 2025 – 1.2%, 2026 – 1.1%, 2027 – 1.6%. 
• Excess capacity in the economy expected to persist but gradually be absorbed.

Why the Bank of Canada Interest Rate Cut Matters

• Structural trade damage limits monetary policy effectiveness 

• Cut intended to support economic activity while keeping inflation low 

• Bank signals current rate level appropriate, future adjustments depend on incoming data 

Mortgage & Lending Highlights (October 2025)

• Prime rate at major banks remains 6.45%. 

• Fixed and variable mortgage rates remain high, reflecting ongoing borrowing costs. 

• Borrowers may see slightly lower rates on new mortgages, but overall costs remain significant. 

Market Reactions & Expert Commentary

• BC Royal Bank is decreasing its prime rate by 25 basis points from 4.70% to 4.45%, effective October 30, 2025. 

• Analysts note that the rate cut supports household and residential investment, but structural trade issues limit broader economic gains. 

What Happens Next?

• Next Rate Announcement: December 10, 2025 

• Next Monetary Policy Report: January 28, 2026 

• Analysts expect no further cuts in 2025; Q4 economic data will guide future policy 

Data table of the important rates

Track monthly rent trends for your city here.

Related Rental & Housing Resources

Rent Reports Canada – https://liv.rent/blog/rent-reports/ 
Bank of Canada  (BoC) – https://www.bankofcanada.ca/2025/10/fad-press-release-2025-10-29/ 

Stay updated on how Bank of Canada decisions affect Canadian renters and landlords. Track monthly rent trends, mortgage rates, and housing data with liv.rent monthly reports.

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The post Bank of Canada Cuts Rates to 2.25% – What it Means for Renters & Landlords (October 2025)   appeared first on liv.rent blog.