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14 Jul

Bank of Canada Holds Rates: What It Means for Your Mortgage

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Posted by: Cedric Pelletier


Bank of Canada Holds Rates: What It Means for Your Mortgage

The Bank of Canada is widely expected to keep its policy rate at 2.25%, marking a sixth straight rate hold. While that decision may not surprise markets, the Bank’s outlook could provide important clues about where interest rates are headed next.

For homeowners and buyers, the focus is shifting from “Will rates be cut?” to “When could rates start rising again?”

Key Takeaways

  • The Bank of Canada is expected to keep its policy rate at 2.25%.
  • Inflation has risen above 3%, increasing pressure for future rate hikes.
  • Canada’s economy is showing signs of recovery after a slow start to 2026.
  • Some economists expect rate hikes later this year, while others don’t see increases until 2027.

Why Is the Bank Holding Rates?

The Bank continues to balance inflation with economic growth. While inflation remains above target, there is still enough slack in the economy to justify waiting before raising rates.

This gives policymakers time to determine whether higher inflation is temporary or becoming more widespread.

Inflation Is Back in Focus

Higher energy costs have pushed inflation above 3%, but the Bank will be watching for signs that rising prices are spreading into wages and everyday goods.

If inflation stays elevated, interest rate hikes become more likely.

What Are Canada’s Big Banks Predicting?

Economists agree a rate hold is likely this week, but opinions differ on what comes next.

  • Scotiabank: Expects rate hikes beginning in late 2026.
  • RBC, CIBC & National Bank: Forecast hikes in 2027.
  • BMO & TD: Expect rates to remain unchanged through 2027.

The timing will depend on future inflation and economic data.

What This Means for Mortgage Borrowers

A rate hold doesn’t guarantee lower mortgage rates ahead. Fixed mortgage rates are influenced by market expectations, and lenders may adjust pricing if investors expect future Bank of Canada hikes.

If you’re buying a home or renewing your mortgage, it’s a good time to review your options and plan for different rate scenarios rather than waiting for rates to fall further.

Bottom Line

The Bank of Canada is expected to leave rates unchanged, but its messaging may be more important than the decision itself. With inflation remaining above target and economic growth improving, future rate hikes are becoming part of the conversation again.

For borrowers, staying informed and planning ahead is the best way to navigate an uncertain rate environment.

FAQ

Will the Bank of Canada raise rates this week?

Most economists expect the Bank to hold its policy rate at 2.25%.

Why are rate hikes being discussed?

Inflation has climbed above the Bank’s 2% target, raising concerns that higher interest rates may be needed if price pressures persist.

Should I lock in my mortgage?

That depends on your financial goals and risk tolerance. Speaking with a mortgage professional can help you decide whether a fixed or variable rate is the better fit.