The latest Bank of Canada rate cut will drive these five personal finance trends in 2025

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What the latest rate decision means for mortgages, GIC rates, the Canadian dollar and more

Financial uncertainties for 2025 are piling up, but we at least have a degree of clarity on interest rates and the economy.

A Donald Trump presidency could do some damage to your finances next year and beyond. Already, Mr. Trump’s threat of 25-per-cent tariffs on Canadian and Mexican goods has contributed to a weaker Canadian dollar and stalled declines for mortgage rates.draws our attention back to the real numbers and fundamentals at work right now.

A factor that potentially works against lower rates is a low Canadian dollar, which is helpful in one sense because it makes our exports more cost-competitive. But a weak dollar also feeds inflation. In fact, the our sagging dollar was cited as a reason whynext year will come in around 3 to 5 per cent next year, well ahead of the 2 per cent rate targeted by the central bank.

Default risk is also an American story, at least in a theoretical sense. The U.S. deficit is approaching extreme levels, worse than Canada, and bond market investors could at some point start losing interest in holding U.S. Treasury bonds. Rates would have to rise to keep these investors interested.Money is still going into guaranteed investment certificates at elevated rates compared to five years ago, but the more interesting story is what’s happening with the money flows from maturing GICs.

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