Interest rate drop offers slight relief as Albertans look ahead to bigger economic moves

The Bank of Canada again lowered its key rate, but it's only a small move in the big changes needed to boost the economy.

As U.S. tariffs and trade uncertainty continue to weaken Canada’s economy, another interest rate cut could provide some breathing room for people with variable rate loans.

“While this is good news, it’s not amazing news because we have a lot of headwinds as Canadians, as Albertans, that we need to address,” said Stacy Yanchuk-Oleksy, CEO of Money Mentors, a non-profit credit counselling agency.

The Bank of Canada cut rates by .25 basis points.

It’s the second consecutive cut, and it brings the rate to 2.25 per cent.

It’s a move meant to counter economic challenges but keep inflation in check as Canada aims to reinvigorate local industry and forge new trade routes—something that won’t happen quickly.

“The weakness we’re seeing in the Canadian economy is more than a cyclical downturn. It is also a structural transition,” said Tiff Macklem, governor of the Bank of Canada.

Mortgage experts say it is a good time to buy a home or change your current payment plan.

“A good opportunity to refinance some higher investors’ debts; you can refinance into a variable rate mortgage, and that does help your cash flow as well by eliminating some car loans and credit card debt and stuff like that,” said Desiree O’Doherty, an Okotoks-based mortgage broker.

Those not impacted by the interest rate drop must find other ways to manage challenges, including the cost of living and Alberta’s high unemployment rate—especially for young people.

“The most boring advice I can offer, but it works, is track your expenses; literally just write it down because then you become more conscious with your money,” said Yanchuk-Oleksy, adding that you can do this by hand, on a computer or through an app.

While tariffs are devastating for the auto, steel, aluminum and lumber industries, Alberta’s primarily oil and gas-fuelled economy has been somewhat sheltered so far.

The Bank of Canada can only do so much to counter the challenges, however.

The bigger moves will come from the federal government.

“I think the Bank of Canada cut will help around the edges, but what Albertans are looking for is something much deeper than that, much more structural than that, to get the economy going, and that’s really going to be by executing some of these big projects,” said Mark Parsons, chief economist at ATB Financial.

Prime Minister Mark Carney will deliver his first federal budget on Nov. 4, and it’s expected to include measures to help Canadian businesses and stimulate investment.

He has also said that before the Grey Cup on Nov. 16, he will reveal the next tranche of major projects to be fast-tracked.

Many Albertans are hoping for something to boost the province’s energy industry.