Bank of Canada Holds Interest Rate at 2.25 Per Cent

The Bank of Canada maintained its key overnight lending rate at 2.25 per cent on Wednesday, marking the seventh consecutive hold. Governor Tiff Macklem attributed the decision to economic uncertainty caused by an ongoing conflict in the Middle East and a trade war with the United States, noting that the U.S. has imposed new tariffs on Canadian exports.

While the central bank remains cautious, investors in the overnight swaps market have increased bets for a rate hike in December. Some economists, including those at Scotiabank, predict rates could reach 2.75 per cent by the end of the year and 3 per cent by mid-2027 if inflation persists. This volatility has widened the spread between mortgage products, causing five-year fixed rates to rise while variable rates remain tied to the key rate.

The Canadian Mortgage Brokers Association criticized the hold, arguing that it fails to address the elevated cost of interest for homebuyers. The association stated that the decision does little to relieve the financial pressures currently facing Canadians in the current economic environment.