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Canada Interest Rate | Bank of Canada Rate 2026

Updated

Key takeaways:

  • The Bank of Canada overnight rate is currently 2.25% (effective October 30, 2025).
  • The Canadian prime rate is 4.45% — this directly affects variable-rate mortgages and lines of credit.
  • The next rate announcement is September 2, 2026.
  • The Bank of Canada has held rates steady at 2.25% since October 2025, after cutting from a peak of 5.00% in mid-2023.

The current interest rate in Canada is 2.25% as of the most recent Bank of Canada interest rate announcement (effective October 30, 2025). This is the policy interest rate (also known as the target for the overnight rate) set by the Bank of Canada.

The policy interest rate impacts short-term interest rates such as the prime rate in Canada.

Bank of Canada interest rate next date

The Bank of Canada has held the interest rate steady at 2.25% since October 2025 after a sustained cutting cycle brought rates down from a peak of 5.00%. The next interest rate announcement is September 2, 2026.

The Bank of Canada releases interest rate announcements eight times a year. Here are the remaining 2026 announcement dates:

  • September 2, 2026 (next)
  • October 28, 2026
  • December 9, 2026

For the full schedule and past decisions, see the Bank of Canada rate announcement schedule.

Interest rate history in Canada

These are the historical changes to the policy interest rate in Canada. The Bank of Canada influences short-term interest rates by changing the policy interest rate also known as the target for the overnight rate.

Date Decision Policy Rate Change
April 21, 2009 Data begins 0.25% —
June 1, 2010 Hike 0.5% +0.25%
July 20, 2010 Hike 0.75% +0.25%
September 8, 2010 Hike 1% +0.25%
January 21, 2015 Cut 0.75% -0.25%
July 15, 2015 Cut 0.5% -0.25%
July 12, 2017 Hike 0.75% +0.25%
September 6, 2017 Hike 1% +0.25%
January 17, 2018 Hike 1.25% +0.25%
July 11, 2018 Hike 1.5% +0.25%
October 24, 2018 Hike 1.75% +0.25%
March 4, 2020 Cut 1.25% -0.5%
March 16, 2020 Cut 0.75% -0.5%
March 27, 2020 Cut 0.25% -0.5%
March 3, 2022 Hike 0.5% +0.25%
April 14, 2022 Hike 1% +0.5%
June 2, 2022 Hike 1.5% +0.5%
July 14, 2022 Hike 2.5% +1%
September 8, 2022 Hike 3.25% +0.75%
October 27, 2022 Hike 3.75% +0.5%
December 8, 2022 Hike 4.25% +0.5%
January 26, 2023 Hike 4.5% +0.25%
June 8, 2023 Hike 4.75% +0.25%
July 13, 2023 Hike 5% +0.25%
June 6, 2024 Cut 4.75% -0.25%
July 25, 2024 Cut 4.5% -0.25%
September 5, 2024 Cut 4.25% -0.25%
October 24, 2024 Cut 3.75% -0.5%
December 12, 2024 Cut 3.25% -0.5%
January 30, 2025 Cut 3% -0.25%
March 13, 2025 Cut 2.75% -0.25%
September 18, 2025 Cut 2.5% -0.25%
October 30, 2025 Cut 2.25% -0.25%

Source: Bank of Canada Valet API, series V39079 (“Target for the overnight rate”), fetched 2026-09-02. Valet API serves V39079 only from 2009-04-21 onward; earlier history is not pipeline-sourced.

These interest rates are sourced directly from the Bank of Canada Valet API (series V39079).

Types of interest rates in Canada

There are several important interest rates in Canada, each serving a different function in the financial system.

Overnight rate (policy interest rate)

This is the rate the Bank of Canada targets for overnight lending between major financial institutions. It is the most influential rate in Canada because it drives all other short-term rates. The current overnight rate is 2.25%.

Prime rate

The prime rate is set by commercial banks, typically at the overnight rate plus 2.20%. It serves as the benchmark for variable-rate mortgages, HELOCs, and lines of credit. The current prime rate is 4.45%.

Fixed mortgage rates

Fixed mortgage rates are tied to Government of Canada bond yields rather than the overnight rate. The 5-year Government of Canada bond yield is the primary benchmark for the popular 5-year fixed mortgage term. Fixed rates can move independently of the overnight rate. See current mortgage rates for the latest fixed-rate offerings.

GIC rates

GIC rates are influenced by both the Bank of Canada rate and bond yields. When the overnight rate rises, GIC rates typically follow. Longer-term GICs tend to track bond yields more closely.

Savings account rates

High-interest savings account (HISA) rates generally follow the overnight rate closely but with a lag. Banks adjust savings rates after Bank of Canada announcements, though not always by the full amount.

Bank rate and deposit rate

The Bank of Canada also sets a bank rate (overnight rate + 0.25%) and a deposit rate (overnight rate − 0.25%). These form the upper and lower bounds of the overnight lending corridor and are less commonly referenced by consumers.

How interest rates affect the economy

Interest rates are the Bank of Canada’s primary tool for managing the economy. The impacts ripple through virtually every area of financial life.

When rates rise

  • Borrowing becomes more expensive — Monthly payments on variable-rate mortgages, HELOCs, and lines of credit increase
  • Spending slows — Higher borrowing costs discourage consumers and businesses from taking on new debt
  • Housing market cools — Higher mortgage rates reduce mortgage affordability, which can slow home price growth
  • Savings become more attractive — Higher GIC rates and savings account yields encourage saving
  • Inflation tends to decrease — Reduced spending takes pressure off prices

When rates fall

  • Borrowing becomes cheaper — Variable-rate loan payments decrease, making debt more affordable
  • Consumer spending increases — Lower borrowing costs encourage purchases and investment
  • Housing activity rises — Improved affordability can stimulate home buying
  • Savings yields decrease — Returns on GICs and savings accounts fall
  • Economic growth is stimulated — Cheaper credit encourages business investment and job creation

Rate forecasting and market expectations

While no one can predict interest rates with certainty, several indicators help gauge the direction of future rate movements:

  • Bond yields — The Government of Canada 5-year bond yield is a forward-looking indicator. When bond yields fall, it often signals market expectations of future rate cuts.
  • Interest rate swaps — Financial markets price in expected rate changes through the overnight index swap (OIS) market. These are a reliable indicator of market consensus.
  • Inflation data — The Consumer Price Index (CPI) released monthly by Statistics Canada is the Bank’s primary target. Inflation consistently above 2% may signal rate increases, while below-target inflation may signal cuts.
  • Employment reports — The monthly Labour Force Survey shows employment trends. Rising unemployment often leads to rate cuts to stimulate the economy.
  • Bank of Canada communications — The Monetary Policy Report and the Governor’s press conferences provide forward guidance on the Bank’s thinking.

How to position for interest rate changes

Understanding the rate environment can help you make better financial decisions.

In a falling rate environment (like 2024–2026)

  • Consider a variable-rate mortgage — Variable rates benefit directly from rate cuts. If you expect further cuts, a variable-rate mortgage through our mortgage calculator lets you model potential savings.
  • Lock in GIC rates now — If rates are expected to fall further, locking in current GIC rates for longer terms secures today’s higher yields.
  • Refinance existing debt — Lower rates may make it worthwhile to refinance your mortgage or consolidate debt. Check with our mortgage refinance calculator.

In a rising rate environment

  • Choose a fixed-rate mortgage — A fixed rate protects you from payment increases. Compare terms with our mortgage rates page.
  • Pay down variable-rate debt — Prioritize paying down HELOCs, lines of credit, and variable-rate loans before rates rise further.
  • Take advantage of higher savings yields — Rising rates mean better returns on savings accounts and GICs.
  • Keep shorter GIC terms — Shorter-term GICs allow you to reinvest at higher rates as they mature.