Bank of Canada Rate Decision: Latest Hold at 2.25% and Forecast

Anyone watching their mortgage renewals or savings account rates knows the Bank of Canada’s next move matters. After a historic tightening cycle that pushed rates to 5% in 2022, followed by a steady path of cuts through 2024 and 2025, the central bank held its policy rate at 2.25% on January 28, 2026 — this article walks through the current rate, what’s coming next, and what it means for your borrowing costs.

Current policy rate: 2.25% ·
Last change: October 2025 (cut to 2.25%) ·
Next announcement: March 18, 2026 ·
Fixed announcement dates per year: 8

Four key economic indicators, one snapshot: the Bank of Canada is balancing inflation that ticked up to 2.4% in December against a labour market where unemployment sits at 6.5% and GDP growth is running at a modest 1.5% annualized.

What’s the next Bank of Canada rate announcement?

Upcoming announcement dates for 2025 and 2026

• The next scheduled policy interest rate announcement is March 18, 2026 at 09:45 ET, as stated by the Bank of Canada in its January 28, 2026 press release.
• For 2025, the Bank of Canada published a fixed schedule of eight announcement dates: January 29, March 12, April 16, June 4, July 30, September 17, October 29, and December 10, all at 09:45 ET (Bank of Canada — 2025 publication schedule).
• The January 29, 2025 announcement included a cut of 25 basis points to 3.00%, according to the Bank of Canada’s key interest rate page.
• Scotiabank’s timeline confirms the rate dropped to 2.75% after the March 12, 2025 decision (Scotiabank — rate decision timeline).
• The January, April, July, and October announcements each coincide with the release of the Monetary Policy Report (Bank of Canada — 2025 schedule).

How to watch the announcement live

• All rate announcements are webcast live at 09:45 ET on the Bank of Canada’s website and YouTube channel.
• For the March 18, 2026 decision, expect a press release followed by a press conference with Governor Tiff Macklem at 10:30 ET.
• Major Canadian banks including RBC Royal Bank — rate announcement page publish instant analysis within minutes of the release.

What is the Bank of Canada’s current policy rate?

Why the rate was held at 2.25%

• The current overnight rate target is 2.25% (described by the Bank of Canada as 2¼%). The Bank held the rate at this level on January 28, 2026, after a series of cuts throughout 2025 (Bank of Canada — FAD press release January 28, 2026).
• In its January 28, 2026 statement, the Bank noted that inflation picked up to 2.4% in December, while its preferred core inflation measures eased from 3% in October to around 2.5% in December — still above the 2% target but moving in the right direction.
• GDP growth was reported at a moderate 1.5% annualized, giving the Governing Council room to hold steady rather than cut further or raise rates.
• The Bank’s Governing Council stated that monetary policy remains restrictive enough to bring inflation back to 2%, and that they would be taking a cautious approach to future decisions.

How the policy rate influences mortgage rates

• The Bank of Canada’s overnight rate target sets the cost at which major banks lend to each other overnight. This directly influences prime rates at Canadian banks, which in turn determine variable mortgage rates and lines of credit.
• Fixed mortgage rates, by contrast, are driven primarily by Government of Canada bond yields, which reflect broader market expectations for future rate decisions and global economic conditions.
• After the March 12, 2025 cut to 2.75%, Scotiabank reported that prime rates at major banks dropped in tandem, reducing monthly payments for variable-rate borrowers (Scotiabank — interest rate decisions and inflation).

“The Governing Council decided to hold the policy rate at 2¼% and will be taking a cautious approach to future decisions, with inflation still above target and core measures showing only gradual progress.”

— Bank of Canada — January 28, 2026 press release

What is the interest rate forecast for Canada?

Expert forecasts on potential rate cuts

• Forecasts are mixed. Some economists expect the Bank of Canada to resume cuts later in 2026 if inflation continues to ease toward 2%, while others forecast a prolonged hold given that core inflation was still at 2.5% in December (Bank of Canada — January 28, 2026 statement).
• According to TD Stories — December 2025 rate announcement analysis, the Bank’s decision in December 2025 telegraphed a cautious stance into 2026, with future cuts dependent on economic data.
• Scotiabank reported that Canada’s inflation rate was 1.9% in June 2025, after 1.7% in both May and April 2025, showing that inflation was volatile throughout 2025 (Scotiabank — rate decisions and inflation).

Factors influencing the Bank of Canada’s next move

• Inflation: The Bank’s January 2026 statement showed headline CPI at 2.4% and core measures around 2.5% — still above the 2% target but down from 3% in October 2025.
• Labour market: With unemployment at 6.5%, the economy has some slack, which reduces wage pressure but also signals softening demand.
• GDP growth: At 1.5% annualized, growth is below Canada’s potential, which argues for accommodative policy over time.
• Global conditions: U.S. Federal Reserve decisions, trade dynamics, and commodity prices all feed into the Bank of Canada’s outlook.

How does the Bank of Canada rate affect mortgage payments?

Example monthly payment on a $400,000 mortgage at 7%

• On a $400,000 mortgage with a 25-year amortization at a contract rate of 7%, the approximate monthly payment is $2,818.
• The stress test requires borrowers to qualify at a rate of 5.25% or the contract rate plus 2% (whichever is higher). At 7%, the qualifying rate becomes 9%, which significantly raises the income needed to be approved by federally regulated lenders.

Income required for a $400,000 mortgage in Canada

• Using the stress test at 9% with a 25-year amortization, the monthly payment jumps to roughly $3,350. Lenders generally require that total housing costs (mortgage, taxes, heating) not exceed 32% of gross household income.
• That means a household needs approximately $125,000–$130,000 in annual gross income to qualify for a $400,000 mortgage at a 7% contract rate under current stress test rules.
• Variable-rate borrowers feel every Bank of Canada rate change immediately: a 25-basis-point cut on a $400,000 variable mortgage reduces monthly payments by about $50–$60, while a 25-basis-point increase adds the same amount.
• According to RBC Royal Bank — rate announcement guide, the Bank of Canada’s rate decisions directly influence the prime rate used by major banks, which in turn sets the floor for variable mortgage pricing.

When should we expect the next rate cut?

Statements from recent Bank of Canada meetings

• The Bank of Canada’s Governing Council explicitly signaled caution on future cuts in its January 28, 2026 statement: the policy rate was held at 2.25%, and the Council said it “will be taking a cautious approach to future decisions” given that inflation remains above target (Bank of Canada — FAD press release).
• After the December 2025 decision, TD reported that the Bank expected to hold rates steady into early 2026 while monitoring economic data (TD Stories — December 2025 rate announcement).
• Scotiabank’s timeline shows the policy rate moving from 3.00% (January 2025) → 2.75% (March 2025) → further cuts through 2025 to 2.25% by October 2025 — a clear easing trajectory that paused in early 2026 (Scotiabank — interest rate decisions timeline).

Market pricing for future rate cuts

• Financial markets currently price a potential for further cuts later in 2026, though the timing remains uncertain. According to an Equals Money — BoC interest rate decision calendar, economists surveyed in late 2025 expected the Bank to hold rates steady into 2026, with cuts possible if economic conditions weaken.
• Key dates to watch beyond March 18, 2026: April 29, June 10, and the remaining 2026 scheduled announcements in July, September, October, and December — each paired with updated Monetary Policy Reports in April, July, and October.
• The Bank of Canada’s own forward guidance emphasizes data dependence: if inflation resumes its downward trend toward 2% and GDP growth remains below potential, a rate cut in the second half of 2026 becomes more likely.

“We expect the Bank of Canada to hold rates at 2.25% through the first half of 2026, with the next cut possible in the third quarter if inflation prints continue to soften and GDP growth stays below trend.”

— RBC Royal Bank — economic outlook commentary

The central bank held its overnight rate at 2.25% for the third consecutive meeting, as detailed in the latest Bank of Canada interest rate announcement.

Frequently asked questions

The pattern across two full rate cycles is clear: the Bank of Canada raised fast and aggressively in 2022–2023 to tame inflation, then cut steadily through 2024–2025. Now at 2.25%, the question is whether the next move is another cut or a prolonged pause. For the Canadian variable-rate borrower with a $400,000 mortgage, the decision is clear: lock in a rate now or wait for potential relief in the spring of 2026 — because a hold at 2.25% means stable payments today, but any renewed inflation data could push the next cut further into the future.