Bank of Canada Holds Rate at 2.25% — April 29, 2026

Amy Kinvig • April 29, 2026

The Bank of Canada announced today that it is holding its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. This decision comes against a backdrop of significant global uncertainty — and for Canadian homeowners, buyers, and anyone with a mortgage coming up for renewal, here's what it means.

What the Bank of Canada Said

A World Under Pressure

The Bank cited two major forces shaping today's decision: the ongoing conflict in the Middle East and continued uncertainty around U.S. trade policy. The Iran war has pushed energy prices sharply higher and disrupted transportation routes, squeezing oil-importing economies and pushing inflation up globally. Meanwhile, U.S. tariffs and shifting trade patterns continue to create headwinds for Canadian businesses and exporters.

Financial markets have been volatile, reflecting daily developments in the Middle East. Bond yields are modestly higher since January, and the U.S. dollar has strengthened against most major currencies — though the Canada-U.S. exchange rate has remained relatively stable.

The Canadian Economy

Canada's economy contracted in the fourth quarter of 2025, but growth is forecast to have resumed in early 2026. Consumer and government spending are providing support, while tariffs and trade uncertainty are weighing on exports and business investment. Housing activity has also declined, held back by slow population growth, economic uncertainty, and affordability challenges.

The labour market remains soft. Employment growth has been subdued over the past year, with job losses in sectors targeted by U.S. tariffs. The unemployment rate is sitting in the 6.5% to 7% range.

The Bank's April forecast projects GDP growth of 1.2% in 2026, rising to 1.6% in 2027 and 1.7% in 2028 as exports and business investment gradually recover.

Inflation

CPI inflation climbed to 2.4% in March, driven largely by higher gasoline prices. The Bank expects inflation to rise further in April — potentially reaching around 3% — before easing back toward the 2% target early next year as oil prices moderate. Core inflation has been holding steady at just above 2%.

Importantly, the Bank is watching carefully to ensure that higher energy prices don't feed through more broadly into goods and services prices. Longer-term inflation expectations remain anchored, which is a positive sign.

Why the Bank Held

With growth risks on one side and rising inflation pressures on the other, the Bank of Canada's Governing Council chose to hold steady at 2.25%. The Bank is "looking through" the immediate inflationary impact of the war in Iran, but has been clear that it will not allow higher energy prices to become entrenched inflation. As conditions evolve, the Bank stands ready to respond in either direction.

What This Means for Mortgage Holders and Buyers

A rate hold means no immediate change to variable-rate mortgage payments or home equity lines of credit (HELOCs) tied to the prime rate. The prime rate remains at 4.45%.

The bigger picture here is one of caution and patience. The Bank is navigating a genuinely difficult environment — balancing weak domestic growth against rising inflation risks from global energy prices. This uncertainty is likely to keep rates on hold for the foreseeable future, rather than signalling cuts or hikes in the near term.

For anyone thinking about locking in a fixed rate, renewing soon, or entering the market as a buyer, this environment calls for careful planning. The difference between rate options can mean thousands of dollars over the life of your mortgage.

The next scheduled rate announcement is June 10, 2026 .

As always, every borrower's situation is unique. If you have questions about how today's announcement affects your mortgage — or want to explore your options before the next decision — don't hesitate to reach out.

Information sourced from the Bank of Canada's official press release and Monetary Policy Report dated April 29, 2026.

Amy Kinvig
By Amy Kinvig September 9, 2026
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By Amy Kinvig September 2, 2026
The Bank of Canada announced today that it is holding its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. While Canada's economic recovery is broadening, a new layer of uncertainty has entered the picture. Here is what happened and what it means for your mortgage.