The Bank of Canada has now held its policy rate steady for six straight decisions, and the September 2 announcement — less than two weeks away — is widely expected to make it seven. Here's what's actually driving that pause, what bank economists and bond markets are pricing in, and what it means if you're renewing a mortgage, buying, or renting somewhere in Canada this year — built entirely from Bank of Canada releases, CREA and CMHC data, and named forecaster commentary.
Six meetings in a row, the Bank of Canada has landed on the same number: 2.25%. That kind of consistency can look boring on a headline, but underneath it sits a genuinely two-sided story — an economy showing real signs of life, an oil-driven inflation spike the Bank is choosing to look through, and a housing market that still hasn't gotten the further relief that a resumed cutting cycle would have brought. Here's what's actually happening, in plain terms.
Why this rate decision matters right now
The Bank of Canada holds eight scheduled rate announcements a year, and the next one lands September 2, 2026, with a full Monetary Policy Report following on October 28. Both dates matter more than usual this cycle: the Bank has now paused for six consecutive meetings after a run of nine cuts between June 2024 and October 2025 brought the rate down from a peak of 5%, and the debate has shifted from "when's the next cut" to "is the next move actually a hike."
Independent voices are largely converging on the same read. The C.D. Howe Institute's Monetary Policy Council — a shadow Governing Council made up of the chief economists of Canada's six largest banks plus leading academics — has called for the Bank to hold at 2.25% through January 2027 before any move higher, reinforcing the sense that this pause has real staying power.
Where the policy rate actually stands
As of the July 15, 2026 decision, the Bank of Canada held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. Prime rate at the major Canadian lenders sits at 4.45%, down from a peak of 7.20% in late 2023, and it directly sets the cost of variable-rate mortgages and home equity lines of credit.
| Rate | Current level | Context |
|---|---|---|
| Overnight target rate | 2.25% | Held for a sixth straight decision, July 15, 2026 |
| Bank Rate | 2.50% | What the Bank charges on overnight advances to banks |
| Deposit rate | 2.20% | What the Bank pays on settlement balances |
| CORRA (Aug 19, 2026) | 2.27% | The overnight repo rate the policy target anchors |
| Big-bank prime rate | 4.45% | Sets variable mortgage and HELOC pricing |
Market pricing as of August 19, 2026 assigns roughly a 1% probability of a hike at the September 2 meeting and about a 27% implied probability of a cut by the October 28 decision — in other words, another hold is by far the most likely outcome in September, with the October meeting carrying slightly more two-way risk. Rate-tracking sites like Ratehub.ca and WOWA.ca update these odds in real time as new economic data lands, so it's worth checking the live number before making a decision.
What's driving the Bank's thinking
Two forces are pulling in opposite directions, and the Bank has chosen to sit still while it watches which one wins out.
The inflation side
Headline CPI inflation rose to 3.2% in May 2026, driven largely by a spike in gasoline prices tied to the conflict in the Middle East. Strip out gasoline, though, and inflation runs closer to 2.2%, with core measures sitting near the Bank's 2% target. The Governing Council's stated base case is that this energy-driven spike is temporary: it expects inflation to stay elevated through the second half of 2026 before easing back toward 2% in early 2027, assuming oil prices moderate toward the US$70–75 per barrel range the July Monetary Policy Report assumed.
The growth side
Canada's economy has been showing real signs of improvement after a weak start to the year, with growth picking up and the sources of that expansion broadening beyond a single sector. The Bank's July 2026 projections put GDP growth at 0.7% for 2026, rising to 1.8% in both 2027 and 2028 — a modest but genuine recovery rather than a boom.
What forecasters expect next
Strip away the noise and there's a fairly tight consensus forming around one idea: 2.25% through the rest of 2026, with the next real debate starting sometime in 2027.
| Forecaster | 2026 view | Beyond 2026 |
|---|---|---|
| BMO, CIBC, RBC, TD | Hold at 2.25% through December | Gradual normalization expected in 2027 |
| National Bank, Scotiabank | See some scope for modest increases if inflation proves sticky | Range toward 2.50–2.75%+ |
| C.D. Howe Institute MPC | Hold at 2.25% through January 2027 | Raise to 2.50% by July 2027 |
| Market-implied (CORRA forward curve) | 2.25–2.50% range, stable to slightly higher | Gradual rise toward 2.50–2.90% in 2027, near 3% longer term |
RBC Economics summed up the prevailing read after the July hold: the decision was widely expected, and the bank's own house view is that 2.25% — the bottom of the Bank's estimated neutral range — is where the rate stays through the end of 2026. Fixed mortgage rates, which track Government of Canada bond yields rather than the overnight rate directly, face only modest upward pressure under most bank forecasts, with 5-year yields projected around 3.0–3.25% by year-end and comparable fixed mortgage rates holding in a fairly narrow band. Lenders like True North Mortgage are telling borrowers much the same thing heading into September: near-term cuts look off the table for now, so plan around a stable rate rather than waiting one out.
How the rate hold is shaping housing
A stable rate is not the same thing as a falling one, and Canada's housing market is feeling that distinction directly. Affordability has improved somewhat since the 2025 cuts, but the market isn't getting the further boost that another leg of cuts would have delivered — so 2026 is shaping up as a year of gradual stabilization rather than a strong rebound.
CMHC's Summer 2026 Housing Market Outlook, published July 22, sets out a similarly measured baseline: resale (MLS) sales around 457,200 for 2026, down from 470,314 in 2025; an average price near $675,200, a slight pullback from $679,543 in 2025; and housing starts around 241,400, down from 259,028, as elevated inventories and high construction costs weigh on new supply. CREA's own July revision lands close by, projecting roughly 463,336 sales (down 1.4% from 2025) and a national average price up about 1.1% to near $686,710 — the small gap between the two estimates reflects different methodologies and snapshot dates rather than a disagreement about direction.
CMHC attributes the softness to a familiar mix: slower population growth, ongoing economic and trade-policy uncertainty, mortgage rates that remain high relative to recent history, and modest income growth. Sluggish housing activity and weak rent growth are, in turn, helping ease shelter-related inflation — one of the quieter reasons the Bank has room to stay patient rather than react to the headline CPI number.
Regional divergence: Vancouver vs. Quebec City
The national average masks a market that's moving in genuinely different directions depending on where you look. Royal LePage's Q4 2026 forecast (year-over-year) captures the spread:
Greater Vancouver
Forecast: -3.5%Weaker relative performance is expected to persist across British Columbia and Ontario through the rest of 2026, largely on affordability strain and softer population-driven demand — the same dynamics CMHC flags as national headwinds, just concentrated more heavily here.
Quebec City
Forecast: +12.0%Low inventory and durable local demand are pushing prices higher even in a national environment of flat-to-softening sales — a reminder that "the housing market" isn't one market, and a stable overnight rate lands very differently depending on local supply conditions.
The mortgage renewal wall
The rate hold's biggest practical impact in 2026 isn't on new buyers — it's on the large share of outstanding Canadian mortgages coming up for renewal this year. Many of those loans were originated during the low-rate stretch of 2020–2022, and even with prime down sharply from its 2023 peak, a large number will renew at a higher rate than their original term, especially borrowers coming off 5-year fixed terms signed before the tightening cycle began.
That's the practical cost of a rate environment that's stable but not falling further: households betting on another leg of cuts to soften their renewal aren't getting it, at least not before the Bank sees clearer evidence that the oil-driven inflation spike has fully faded.
What this means for you
Frequently asked questions
The overnight target rate is 2.25%, held at that level since the Bank's last cut in October 2025. The Bank Rate is 2.50% and the deposit rate is 2.20%. The next scheduled decision is September 2, 2026.
Most bank economists and the bond market currently see the Bank holding at 2.25% through the rest of 2026. Market pricing as of mid-August assigns roughly a 27% implied probability of a cut by the October 28 decision, with the September 2 meeting priced overwhelmingly for another hold.
May 2026 CPI came in at 3.2%, but the Bank attributes most of that spike to gasoline prices tied to the Middle East conflict rather than broad-based price pressure. Inflation excluding gasoline was closer to 2.2%, and the Bank expects the headline number to ease back toward 2% in early 2027 as oil prices moderate.
It depends heavily on region. CREA and CMHC both point to a broadly flat-to-softening national market in 2026, with real weakness concentrated in British Columbia and Ontario and relative strength in the Prairies and parts of Quebec. National averages are a poor guide to any single local market this cycle.
Our methodology
Every figure in this article is sourced from a named, checkable source — the Bank of Canada's own press releases and Monetary Policy Reports, CREA and CMHC market outlooks, Royal LePage's regional forecasts, and named commentary from RBC Economics, the C.D. Howe Institute, and other bank research desks. We did not use estimated or AI-generated financial figures anywhere in this piece.
- Rate levels, CORRA, and market-implied probabilities are snapshot figures as of August 19–20, 2026 and will move — always confirm the live number before acting on it.
- Housing figures are compiled from CREA's July 2026 revised forecast and CMHC's Summer 2026 outlook; where the two differ slightly, we noted the range rather than picking one number to imply false precision.
- Where a specific institution's forecast is cited (e.g. a bank's rate call or a regional price forecast), we attributed it by name rather than presenting it as an unattributed consensus.
- This article is reviewed and updated after each scheduled Bank of Canada decision — check the "Updated" date at the top for currency.
Further reading from housing & policy authorities
- Bank of CanadaOfficial rate decisions, Monetary Policy Reports, and the full announcement schedule
- Canadian Real Estate Association (CREA)National resale housing statistics and quarterly forecasts
- Canada Mortgage and Housing Corporation (CMHC)Housing Market Outlook reports and rental market data
- Royal LePageRegional home price surveys and market commentary
- Ratehub.caLive mortgage rate comparisons and BoC rate tracking
- WOWA.caHistorical BoC rate charts and Canadian housing tools
Sources
Data compiled from the following primary and named sources (accessed August 19–20, 2026):
- Bank of Canada — "Bank of Canada maintains the policy rate at 2¼%," press release, July 15, 2026
- Bank of Canada — Monetary Policy Report, July 2026, and Upcoming Events calendar
- Bank of Canada — Market Participants Survey, Q2 2026 (conducted June 11–18, 2026)
- RBC Economics — "BoC set to hold as inflation and growth concerns fade," July 10, 2026
- C.D. Howe Institute — Monetary Policy Council recommendation, July 9, 2026
- True North Mortgage — Mortgage Rate Forecast (2026–2030), August 2026
- RateProbability.com — BoC Rate Odds, meeting probabilities, snapshot as of August 19, 2026
- Ratehub.ca — Overnight Lending Rate in Canada, updated July 2026
- WOWA.ca — Bank of Canada Interest Rate historical chart and current rate, August 2026
- Canadian Real Estate Association (CREA) — July 2026 revised national sales and price forecast
- Canada Mortgage and Housing Corporation (CMHC) — Summer 2026 Housing Market Outlook, published July 22, 2026
- Royal LePage — Q4 2026 regional home price forecast
