Canada Interest Rate Effectiveness

Macro conditions support a strong rebound in Canada. Post-pandemic inflation – driven initially by supply chain disruptions, then by government stimulus, pent-up demand, labour shortages and geopolitical tensions – stands out as a unique economic episode in modern history. As most inflation drivers have faded and rapid rate hikes from the Bank of Canada and the Federal Reserve have taken effect, price growth is now falling toward the two central banks’ targets. However, Canada’s economy is showing more pronounced signs of weakness due to its unique economic and demographic backgrounds. Nevertheless, these differences suggest that lower interest rates could drive a stronger economic recovery in Canada. As a result, fundamentals in Canada’s commercial real estate sectors are likely to be well supported, sparking a strong rebound in investment activity in 2025.