Bank of Canada Holds Rates Steady. What That Means for You.
Bank of Canada Holds Rates Steady. What That Means for You.
The Bank of Canada announced today that it’s holding its policy rate at 2.25%, choosing not to raise or lower rates for now.
This rate is considered “neutral,” meaning the Bank believes it’s neither slowing the economy down nor stimulating it too much. Inflation is sitting just above the Bank’s 2% target, and underlying inflation pressures are easing. In short, the Bank feels comfortable staying put as long as the economy performs roughly as expected.
What’s Happening in the Canadian Economy
Economic growth in Canada is expected to be modest over the next couple of years. Population growth is slowing, and Canada is still adjusting to U.S. trade policies and tariffs. That said:
Consumer spending has held up reasonably well
Business investment is expected to improve gradually
Government infrastructure spending is providing support
The Bank currently forecasts:
1.1% growth in 2026
1.5% growth in 2027
One of the biggest unknowns remains the upcoming Canada–U.S.–Mexico (CUSMA) trade agreement review, which could have meaningful implications for exports, jobs, and overall growth.
What’s Going On in the U.S.
South of the border, the U.S. economy continues to benefit from strong consumer spending and major investment in artificial intelligence. While the Federal Reserve held rates steady today, markets are expecting multiple rate cuts later this year.
However, there are warning signs. U.S. consumer confidence just fell to its lowest level in more than a decade, reflecting concerns about inflation, the economy, and a softening labour market.
Trade, Jobs, and the Bigger Picture
U.S. tariffs have already had a negative impact on Canadian exports, especially in sectors like steel and aluminum. While Canada is actively trying to diversify trade relationships, there’s no easy replacement for the U.S. market in terms of size, proximity, and cost.
Employment weakened earlier in 2025 in tariff-affected industries, but more recently job growth has returned, led by service sectors like healthcare. Slower population growth is also easing pressure on the labour market.
Government infrastructure spending is expected to rise, which should help support economic activity over time, but rebuilding momentum will take patience.
What This Means for Mortgage Rates
Market interest rates have been drifting higher. The 5-year bond yield is pushing toward 3%, and lenders have already begun nudging fixed mortgage rates upward.
If rate expectations continue to rise, fixed rates may become more attractive for borrowers who value certainty. Variable rates remain tied to the overnight rate, which the Bank has shown it’s comfortable holding steady for now.
Bottom Line
The Bank of Canada is clearly prepared to support the economy if needed, but trade uncertainty remains the biggest wildcard. Until the future of CUSMA is known, Canadians can expect a few more months of economic uncertainty.
For homeowners and buyers, this is a reminder that rate strategy matters. Whether fixed or variable makes sense depends on your timeline, risk tolerance, and overall financial picture.
If you’re wondering how today’s announcement affects your mortgage, renewal, or buying plans, feel free to reach out. Happy to walk through the options and help you make a smart call.
Want to Review Your Mortgage?
If you already have a mortgage, it’s worth checking in to make sure it’s still working for you, and not the other way around. A quick review can help confirm whether your rate, term, and structure still make sense based on today’s market and where things may be heading next.
If you’d like to take a fresh look or just talk through your options, feel free to reach out anytime.
Rob Skoko
Mortgage Broker
📞 604-771-4085
📧 rob@skoko.ca
🌐 www.skokomortgages.ca
