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On Wednesday, July 15th, at its regular policy meeting, the Bank of Canada (BoC) maintained its target for the overnight rate at 2.25 per cent. This is the 6th pause in a row for the BoC after 2 rate drops last fall. With most banks and mortgage lenders, this leaves their consumer prime rates at 4.45 per cent (4.6 per cent with TD Canada Trust).

Why did the Bank of Canada hold the policy rate?

Inflation Tug-of-War: Headline inflation ticked up to 3.2% in May, heavily driven by higher gas prices from ongoing geopolitical tensions in the Middle East. However, when you strip out volatile gasoline, core inflation is sitting comfortably near the Bank’s 2% target.

Economic Resiliency: After stalling over the last year and a half, the Canadian economy is showing signs of a steady rebound. Export growth is resuming, and consumer spending has remained surprisingly resilient.

The Balancing Act: Governor Tiff Macklem noted that while they are seeing broader economic improvement, global trade uncertainties (especially around U.S. tariffs) mean they are firmly in “wait-and-see” mode.

What’s next for the policy rate?

Based on the Bank of Canada’s new Monetary Policy Report and current economic data, here is what the horizon looks like:

A Flat Finish to 2026: Most major bank economists expect the central bank to remain firmly on the sidelines for the remainder of 2026. Barring any major economic shocks, do not expect sudden movements from the BoC in either direction this fall.

Inflation Heading to Target: The BoC projects headline inflation will ease to 2.5% in the second half of 2026, eventually settling at their 2% target by early 2027.

Economic Growth in 2027: After a slow 0.7% GDP growth projected for 2026, the Bank expects the economy to pick up pace, projecting 1.8% growth in 2027.

The “Wildcard” Risk: The BoC did warn that if global conflicts keep oil prices elevated long-term, they may need to raise rates to fight persistent inflation. It is not their base-case plan, but it is a risk they are actively monitoring.

The Bottom Line

No news is generally good news when it comes to rate holds. It shows the extreme volatility of the last few years is leveling out, giving the housing market a chance to find its steady footing.

The next scheduled BoC rate announcement is September 2nd, 2026.

What does this mean for you and your mortgage?

This rate hold reinforces a “wait and see” environment, but it’s not a time to be passive, especially if you have an upcoming renewal.

If you have a variable rate mortgage:

  • Your prime-based rate will remain unchanged. Enjoy the stability for now, but be aware that economists are expecting that the policy rate will slowly go up through 2027 and 2028. This is a good time to be setting some extra money aside to prepare for higher mortgage payments in the future.

If you have an upcoming mortgage renewal in 2026:

  • This stable environment is a critical time to plan. While the BoC is holding its policy rate steady for now, the long-term bond markets (which dictate fixed mortgage rates) are always adjusting based on future expectations and fixed rates are likely increasing slowly over the rest of 2026.
  • The Best Move: Do not wait until you are close to your renewal date to start investigating options, as you may miss out on short windows of time when fixed rates drop. Instead, get in touch with us now to begin planning for your 2026 renewal. We can watch the rates for you and determine the best time to renew, and also analyze the various products available and help you determine whether a short-term fixed rate or an adjustable rate might be the best option to navigate the current uncertainty and position you for success in your next mortgage term.

Have questions?

We are always happy to discuss your financing needs!

Please book an appointment today with one of our broker team to discuss your plans and we’ll make sure you have all the information you need to make the best financial decision and get the best mortgage to reach your goals.

You can find our best mortgage rates here.

Also, it’s always a good idea to stay informed about any changes to the Prime Rate to understand how it may affect your payments and mortgage renewals. If you aren’t already subscribed, you can sign up to our newsletter for updates directly to your inbox.