Hello Clients and Friends,

We wanted to give you a quick update about what's happening with the Bank of Canada and the Federal Reserve (the US central bank) tomorrow. Both central banks are likely to cut their interest rates.

The bond market in Canada is pricing in an 88% chance that Canada will cut its rate by 0.25%, and it's almost certain (US bond market is pricing in a 100% chance) that the US will cut its rate too.

You might think this will lower mortgage rates, but it doesn't directly affect long-term mortgages. These cuts are for overnight borrowing rates, not the 5-year or 30-year mortgage rates.

We've included a chart showing future rate announcement dates and the chances of more rate cuts. Below I have also included the historical overnight rates for Canada and the USA going back to 1993, the shaded areas are technical recessions.

We'll keep an eye on these changes and let you know if anything important happens. If you have questions, feel free to ask us anytime!