The Bank of Canada held its policy rate at 2.25%

The Bank of Canada announced yesterday that it is holding the policy rate at 2.25%, the lower end of its estimate of the neutral overnight rate—where monetary policy is neither expansionary nor contractionary. With inflation hovering just above 2% and core inflation between 2.5% and 3%, the Governing Council continues to view the current rate as “about right.”

Economic Outlook

In its statement, the Bank noted:

“The Bank expects final domestic demand to grow in the fourth quarter, but with an anticipated decline in net exports, GDP will likely be weak. Growth is forecast to pick up in 2026, although uncertainty remains high and large swings in trade may continue to cause quarterly volatility.”

Meanwhile, in the United States, growth remains supported by strong consumer spending and rising investment in artificial intelligence. The Federal Reserve is expected to cut its policy rate by 25 basis points to 3.5%–3.75%, though political pressure is mounting for deeper reductions.

Bottom Line

The Bank of Canada is signaling stability in the face of global trade uncertainty. Canada continues to seek alternative trade partners, with China stepping up purchases of Canadian oil, though no market can fully replace the scale and proximity of the US.

The potential withdrawal of the US from the Canada‑US‑Mexico Agreement (CUSMA) adds further uncertainty. A renegotiation is likely before the end of next year, but for now, the US is signaling its intent to exit.

Closer to home, consumer and business confidence remain subdued, and housing markets – particularly in the Greater Golden Horseshoe – are still soft. Market‑driven interest rates have risen sharply:

• The 5‑year bond yield is testing 3%
• The 2‑year bond yield sits at 2.67%, well above the overnight rate
• Lenders have increased fixed mortgage rates, which may become more attractive if expectations of future hikes persist

What This Means for Borrowers

With fixed mortgage rates already climbing and uncertainty around trade and monetary policy, now is a strategic time to consider securing a rate hold. This ensures you’re protected if borrowing costs rise further in the months ahead.

📌 If you’re planning to buy, refinance, or simply want peace of mind about future borrowing costs, reach out today to discuss your options and secure a rate hold while rates remain favorable.