Canadians ready to splurge following B of C’s rate cut

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Canadians are ready to spend on things other than necessities this summer following the Bank of Canada’s first rate cut in four years.

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From vacations, upgraded living spaces and special occasions, BMO’s Real Financial Progress Index shows that Canadians have big plans on how they will be spending their money in the next little while, as there are expectations for two more rate cuts this year and several more in 2025.

“Inflation is showing continued signs of calming, opening the door for further rate cuts by the Bank of Canada,” Sal Guatieri, a senior economist at BMO, said in a statement.

“Lower borrowing costs and slower-rising living costs should provide sufficient relief to support moderate 2% growth in consumer spending this year and next.”

Of the 2,500 Canadians aged 18 years and older Ipsos surveyed, 20% planned to spend more on summer travel, 38% intend to spend about the same as they did in 2023, and only 15% of respondents said they would spend less than last year.

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Home renovations are another big goal for Canadians with 15% planning to spend more, while 24% will spend the same as last year. Those who stated they would spend less amount to 13%.

As for splurges on large purchases, including buying a car, 18% plan to spend the same as last year while 10% admitted that they plan to spend even more.

Of the parents surveyed, 15% of respondents with children under the age of 18 planned to spend more on summer camps and/or childcare while 36% said they would likely spend the same as they did in 2023.

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Nearly half (48%) admitted they spend more than they know they should while 15% say impulse shopping has prevented them from making financial progress.

“Many Canadians like to make the most of the relatively short summer and look forward to spending the season travelling, celebrating milestones and making memories with friends and family,” Gayle Ramsay, BMO’s head of everyday banking, segment and customer growth, said.

“However, too much fun under the sun without a budget can lead to overspending and you may find yourself drifting away from your financial goals.”

But the future looks bright.

While those surveyed intend to spend more this summer, a whopping 85% believe they are making real financial progress.

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