09/02/2026
Bank of Canada Holds for the 7th Time in a Row
As widely anticipated, on September 2, 2026 the Bank of Canada maintained its overnight rate at 2.25%, the seventh consecutive hold since the last cut in October 2025. The Prime Rate remains at 4.45%.
Why The Hold? Governor Macklem stated: “Since our last decision, inflation and growth in Canada have evolved broadly as forecast. Against that background we decided to leave the policy rate unchanged. However, the upside risks to inflation have increased, while new tariffs make growth prospects more uncertain."
Rate Path Forward: Given that economic uncertainty remains elevated, the Bank of Canada provided no clear direction or timing for possible rate change(s). In fact, it remained neutral and explicitly flagged risks in both directions. The Bank stated:
- "The ongoing conflict in the Middle East is keeping energy prices higher for longer, and this has increased the upside risks to the outlook for inflation." Note: Upward pressure on inflation [prices] can put upward pressure on interest rates.
- "Overall, recent data reaffirm Governing Council’s view of a broadening recovery in Canada’s economy. However, uncertainty is high and new US tariffs and threats of further action pose risks to the sustainability of the recovery." [Economic headwinds can put downward pressure on interest rates].
- "New US tariffs and Canadian counter-tariffs will also raise costs for some businesses and could feed into [higher] consumer prices over time. Note: Upward pressure on inflation [prices] can put upward pressure on interest rates.
What This Means for Mortgages: With the Bank of Canada holding its policy rate steady for now, variable-rate mortgage holders won't see any immediate change to their payments. That could change, however, if the Bank moves rates at a future announcement, since variable rates adjust directly with the policy rate. Fixed rates, by contrast, tend to track bond yields, which shift regularly in response to changing rate expectations, and yields have been extremely volatile over the past six months. Given the unusually high level of uncertainty, now is a particularly important time to review your mortgage strategy or look at securing a rate hold. If rates go up, you are protected; if rates come down, you may still benefit from the lower rate.
What the Economists Think: At the time of writing, the Big 6 Bank economists are also split in their forecasts. They range from no changes through the end of 2027, to +100 basis points (+1.0%) by the end of 2027, which would bring the Bank of Canada's rate to 3.25%. Given that rate momentum changes rapidly, you can stay informed with weekly updates by visiting www.bondyieldwatch.ca, powered by Outline.
Questions about your mortgage options? Contact Outline Financial for a personalized analysis.
