The Bank of Canada rate pause reached seven consecutive holds on September 2, 2026, with the target for the overnight rate still at 2.25%. The Bank of Canada last changed its policy rate on October 29, 2025. Over those seven announcements, the reasons for holding shifted: early in the pause, the concern was weak growth; by September, the Bank was warning about inflation risks from energy prices and tariffs.
KEY TAKEAWAYS
- Final rate cuts: The Bank of Canada reduced its policy rate twice in fall 2025, lowering it to 2.50% on September 17 and 2.25% on October 29.
- Extended pause: The Bank then held the policy rate at 2.25% on December 10, 2025, and again on January 28, March 18, April 29, June 10, July 15 and September 2, 2026.
- Changing message: The rate pause began with the Bank describing 2.25% as “about the right level” and ended the summer with warnings about increased upside risks to inflation.
- Housing outlook: The Bank’s assessment of Canada’s housing market evolved from saying activity “remained weak” in March to reporting “some rebound in housing activity” in September.
- Mortgage rates: While the prime rate at chartered banks has remained 4.45% throughout the pause, five-year Government of Canada bond yields have moved higher, putting upward pressure on fixed mortgage rates.
- What’s next: The next scheduled Bank of Canada rate announcements are October 28, 2026 and December 9, 2026.
How the Bank Got to 2.25%
The Bank of Canada lowered its policy rate by 25 basis points on September 17, 2025, to 2.50%, and by another 25 basis points on October 29, 2025, to 2.25%. At the October cut, the Bank said Canada’s economy had contracted by 1.6% in the second quarter of 2025, and the unemployment rate stood at 7.1%. It added that if the economy evolved as projected, the Governing Council saw the rate “at about the right level.” Every decision since has kept it there.
THE RATE PAUSE AT A GLANCE
| Date | Decision | What the Bank Highlighted | Five-Year GoC Yield That Day |
|---|---|---|---|
| October 29, 2025 | Cut to 2.25% | Weak economy from U.S. trade actions; rate seen as about right. | 2.73% |
| December 10, 2025 | Hold | Surprisingly strong Q3 growth of 2.6%; unemployment down to 6.5%. | 3.01% |
| January 28, 2026 | Hold | Outlook little changed; CUSMA review identified as a key uncertainty. | 2.94% |
| March 18, 2026 | Hold | Middle East conflict lifted energy prices; Q4 GDP fell 0.6%. | 3.01% |
| April 29, 2026 | Hold | Iran war pushed inflation forecasts higher; housing activity remained constrained by affordability. | 3.26% |
| June 10, 2026 | Hold | Q1 GDP down 0.1%; CPI reached 2.8% in April. | 3.13% |
| July 15, 2026 | Hold | Economic growth resumed; CPI reached 3.2% in May, largely driven by gasoline prices. | 3.14% |
| September 2, 2026 | Hold | Q2 GDP rose 3.3%; new U.S. tariffs were introduced; upside inflation risks increased. | 3.42% |
Sources: Bank of Canada policy rate history; Bank of Canada announcements as archived in REMAX Canada’s rate announcement recap
Hold by Hold: What the Bank Said
December 10, 2025: First Hold
Canada’s economy grew by a surprisingly strong 2.6% in the third quarter, though the Bank noted that final domestic demand was flat. The unemployment rate fell to 6.5% in November, and CPI inflation slowed to 2.2% in October. The Bank repeated that 2.25% was about the right level if the economy tracked its October forecast.
January 28, 2026: Second Hold
With a new Monetary Policy Report, the Bank projected growth of 1.1% in 2026 and 1.5% in 2027. CPI inflation was 2.4% in December, and the Bank’s preferred core measures had eased to around 2.5%. It named the upcoming review of the Canada-US-Mexico Agreement as a key source of uncertainty.
March 18, 2026: Third Hold
The conflict in the Middle East pushed up oil and natural gas prices, and global bond yields rose. GDP contracted by 0.6% in the fourth quarter of 2025, and the Bank said housing markets remained weak. CPI inflation had eased to 1.8% in February, but the Bank expected gasoline prices to push it higher in the coming months.
April 29, 2026: Fourth Hold
The April Monetary Policy Report revised inflation projections up because of the jump in energy prices. The Bank said housing activity declined in the fourth quarter and was held back by slow population growth, economic uncertainty, and ongoing affordability issues. It also said it would “not let higher energy prices become persistent inflation.”
June 10, 2026: Fifth Hold
GDP edged down by 0.1% in the first quarter, weaker than expected, and housing activity declined. CPI inflation rose to 2.8% in April, and oil prices were roughly $10 a barrel above the Bank’s April assumptions. The unemployment rate was 6.6% in May.
July 15, 2026: Sixth Hold
The Bank estimated second-quarter growth at 2.5% and said sources of growth appeared to be broadening. CPI inflation had risen to 3.2% in May, mainly because of gasoline, while inflation excluding gasoline was 2.2%. The Bank described housing activity as weak but looking to be stabilizing.
September 2, 2026: Seventh Hold
GDP grew by 3.3% in the second quarter, and the unemployment rate edged down to 6.4% in July. The Bank reported “some rebound in housing activity” after several weak quarters. It also noted that trade talks between Canada and the United States had broken down, with new US tariffs and Canadian countermeasures announced. The September 2 press release has the full statement.
What the Pause Has Meant for Mortgage Holders
For variable-rate borrowers, the pause has meant stability. The prime rate at chartered banks has been 4.45% since the October 2025 cut, according to Bank of Canada data, so payments tied to prime have not moved.
For fixed-rate shoppers, the picture is different. The five-year Government of Canada bond yield rose from 2.73% on the day of the October 2025 cut to 3.42% on September 2, 2026. Fixed mortgage rates are influenced more by bond yields than by the policy rate, which is why CREA’s September 8 commentary said borrowers are already facing higher fixed rates. The REMAX guide to mortgages and interest rates in Canada explains how each rate type responds.
What to Watch at the Next Announcements
The Bank has two scheduled announcements left in 2026: October 28, with a new Monetary Policy Report, and December 9. CREA’s reading after the September decision is that a potential hike is back on the table for one of those meetings, though not a done deal. Three things will affect the next announcement, based on what the Bank said in September:
- Whether high gasoline prices start to spread to the prices of other goods and services
- How the new US tariffs and Canadian counter-tariffs affect growth, hiring and consumer prices
- Whether the second quarter rebound in the economy, including housing, holds up
FREQUENTLY ASKED QUESTIONS
How Many Times Has the Bank of Canada Held Rates in a Row?
The Bank of Canada has held its policy rate at 2.25% for seven consecutive scheduled rate announcements, maintaining the same setting throughout 2026 to date.
When Did the Bank of Canada Last Change Its Interest Rate?
The Bank last changed its policy rate on October 29, 2025, when it lowered the target for the overnight rate by 25 basis points to 2.25%.
Why Has the Bank of Canada Held at 2.25%?
At the beginning of the pause, the Bank described 2.25% as about the right level to keep inflation near its 2% target while supporting an economy affected by U.S. tariffs. Throughout 2026, policymakers balanced slower economic growth against inflation pressures tied to energy prices. In September 2026, the Bank said the economy and inflation were evolving broadly as expected but noted that upside risks to inflation had increased.
Has the Prime Rate Changed During the Pause?
No. The prime rate at Canada’s chartered banks has remained 4.45% since the Bank of Canada’s October 2025 rate cut, providing stability for variable-rate borrowers throughout the pause.
When Is the Next Bank of Canada Announcement?
The next scheduled Bank of Canada rate announcement is October 28, 2026, accompanied by a new Monetary Policy Report containing updated growth and inflation forecasts. The final announcement of 2026 is scheduled for December 9, 2026, while the first announcement of 2027 is scheduled for January 27, 2027.
BLOG SOURCED ON REMAX CANADA | WRITTEN BY LYDIA MCNUTT