Bank of Canada Holds Policy Rate!
Bank of Canada Holds Policy Rate!
Date Posted: July 30, 2025
The Rate Announcement
The Bank of Canada has maintained its overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%. Due to ongoing uncertainty surrounding US trade policy and tariffs, the July Monetary Policy Report (MPR) has avoided traditional GDP and inflation projections. Instead, it outlines a current tariff scenario, as well as two alternatives—one with escalating tariffs and one with a de-escalation. While global trade has faced volatility, the broader global economy remains relatively stable, with US growth moderating but its labour market holding firm. Meanwhile, global oil prices and equity markets have stayed resilient, and Canada’s currency has strengthened against a weaker US dollar.
What Does This Impact?
The Bank of Canada’s target overnight policy rate affects the interest you pay from lenders like banks. The higher the overnight rate, the more interest you will pay. The July 2025 rate hold from the Bank of Canada means that variable and adjustable mortgage holders will see no change in their interest costs and no change in their mortgage payments. Fixed rate mortgages are not as directly impacted by the BOC rate announcement, however the bond markets which influence fixed rates have largely already built in the expected rate hold.
Getting Back on Track
Inflation remains close to target, with CPI inflation at 1.9% in June, largely driven by high shelter costs and rising non-energy goods prices. Under the current scenario, inflation is expected to hover around 2%, though tariffs and higher business costs could push it upward. Given the economy’s mixed signals and ongoing trade uncertainty, the Governing Council has opted to keep interest rates steady for now, but it remains open to future rate cuts if economic weakness outweighs inflationary pressures. The Bank’s priority is to support economic growth while maintaining Canadians’ confidence in price stability.
The next rate announcement is scheduled for September 17th, 2025.
If you have questions about your own mortgage, and the best strategy for you, please contact your broker today.
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