09/02/2026
The Bank of Canada maintained the target for its overnight rate unchanged at 2.25%, which means the 4.45% bank prime rate that variable rates are based on remains the same.
This was expected but Canada has some risks to inflation and the outlook is very uncertain.
Basically, when the economy is doing poorly, the government cuts rates to try and stimulate the economy. And when the economy is overheated, which causes inflation, the government raises rates to slow down the economy.
Canada’s GDP growth through the past 10 years is the lowest out of all 38 OCED countries and is projected to be dead last for the next 30 years. Canada’s economy is not doing well. But then the trade war with the US, and massive federal debts in Canada and the US, are inflationary. Food prices have increased 31% over the past 5 years in Canada. Right now, bond yields are rising which is now putting upwards pressure on the fixed mortgage rates. But if Canada raises rates, and other countries do not, our dollar drops in value. Which means everything that is imported becomes more expensive. A lot of uncertainty going forward here.
