Seven Months of Stability: Bank of Canada Holds Interest Rates at 2.25%
The Bank of Canada has maintained its policy rate at 2.25% for seven consecutive announcements, starting from October 29, 2025. The decision to pause interest rates was initially driven by concerns over weak growth and inflation risks tied to energy prices and tariffs. However, as the economy evolved, the Bank's focus shifted towards balancing slower economic growth with inflation pressures.
Throughout 2026, policymakers have closely monitored various indicators, including GDP growth, unemployment rates, and housing activity. The Bank has described the current rate setting as 'about the right level' to keep inflation near its 2% target while supporting an economy affected by US tariffs.
The pause in interest rates has had different implications for variable-rate borrowers and fixed-rate shoppers. For variable-rate borrowers, the stability provided by the prime rate at 4.45% since October 2025 has been a welcome relief. In contrast, fixed-rate mortgage holders have faced higher rates due to rising five-year Government of Canada bond yields.
The Bank's next scheduled announcement is on October 28, 2026, which will include a new Monetary Policy Report with updated growth and inflation forecasts. The December 9, 2026 announcement will be the final one in 2026 before the first meeting in 2027 on January 27.