Monday Market Minute | Sep 15, 2025
Bank of Canada resumes cutting with a 25bps reduction, signalling a gradual easing path through year-end as growth concerns outweigh tariff inflation.
What Moved
The Bank of Canada resumed its easing cycle with a 25bps cut in September, bringing the overnight rate to 2.50%. Macklem's statement indicated that the growth-support imperative had won out over tariff-inflation caution, citing softening employment data and below-potential GDP growth as the decisive factors. The forward guidance suggested one to two additional cuts were plausible before year-end, depending on data. Bond markets rallied, with the 5-year GoC yield dropping to 2.6%, pulling fixed mortgage rates lower.
Why It Matters
The resumption of cuts was unambiguously positive for private markets. Floating-rate private credit portfolios adjusted downward in base rate terms, but the compression was modest enough to preserve attractive absolute yields. Real estate valuations received a boost from lower discount rates and improved affordability metrics. PE deal economics improved as acquisition financing costs declined. For investors who had maintained positions through the summer pause, the September cut validated their patience — and for those with dry powder, it created urgency to deploy before rate-driven competition compressed returns.
Signal to Watch
Whether the housing market would respond to the combination of lower rates and fall seasonality with a meaningful volume increase, confirming the recovery thesis that had been building since spring.