Bank of Canada Rate Announcement

Date Posted: September 2, 2026

Bank of Canada Holds Rate at 2.25% as Trade and Geopolitical Risks Cloud the Outlook

September 2, 2026 — The Bank of Canada held its target for the overnight rate at 2.25% today, marking the seventh consecutive decision to leave borrowing costs unchanged. The Bank Rate stays at 2.5% and the deposit rate at 2.20%.

For homeowners across Ottawa and the rest of the country, it's another "steady as she goes" announcement on the surface — but the details underneath are worth understanding, especially if you're planning to buy, sell, or renew in the coming months.

Why the Bank held steady

Two forces dominated the Bank's thinking this time around. The first is geopolitical: the ongoing conflict in the Middle East has kept energy prices elevated, and with little progress on reopening the Strait of Hormuz, that pressure isn't expected to ease soon. The second is closer to home — the breakdown of trade talks between Canada and the United States has led to new U.S. tariffs and Canadian counter-measures, adding fresh uncertainty to the growth outlook.

At the same time, the domestic economy is showing real resilience. GDP grew 3.3% in the second quarter, a sharp rebound after a weak start to the year, with gains spread across consumer spending, housing activity, exports, and business investment. The unemployment rate edged down to 6.4% in July, though the Bank notes that demand for labour is still relatively soft and the economy is running with some excess capacity.

What's happening with inflation

Headline inflation has been hovering around 3%, but the Bank was clear that gasoline prices are doing most of that work. Strip out gas, and inflation runs closer to 2.2%, with core measures sitting near the Bank's 2% target. That said, the Bank flagged that the longer energy prices and tariff-related costs persist, the greater the risk they spread into the broader price picture — which is part of why it isn't ready to consider cutting rates yet.

What this means for your mortgage

• Variable-rate and HELOC borrowers: No change this round — your rate stays where it is until the next scheduled announcement.
• Fixed-rate borrowers and anyone renewing soon: Fixed rates track bond yields rather than the overnight rate directly, and the Bank noted that long-term bond yields have moved up since July, both globally and in Canada. That means fixed-rate pricing can shift even when the Bank itself holds steady — all the more reason to compare offers rather than assume your renewal terms will look the same as your last one.
• Prospective buyers: With the policy rate on an extended hold and the economy strengthening, there's no clear signal of near-term rate relief. If affordability is tight, it may be worth reviewing your options with a broker rather than waiting for a rate cut that isn't guaranteed.

What's next

The Bank's next scheduled rate announcement is October 28, 2026, alongside a new Monetary Policy Report. Governing Council was explicit that it's watching how the trade situation and the broader economic rebound evolve, and remains prepared to adjust policy if conditions change materially.

Have questions about how this announcement affects your specific mortgage — whether you're renewing, refinancing, or buying? Reach out to our team and we'll walk you through your options.