Sunita Somvanshi
The Bank of Canada maintained its target overnight lending rate at 2.25% on September 2, 2026. The Bank Rate stands at 2.50% and the deposit rate at 2.20%. This marks the seventh consecutive decision to hold rates unchanged, a pause that began in late 2025.
For people with variable-rate mortgages tied to the Bank’s policy rate, this decision means borrowing costs stay where they are for now.
Canadian headline inflation has been around 3% in recent months, mainly because of persistently high gasoline prices. CPI excluding gasoline was 2.2% in July. Core inflation measures remained close to 2%.
The Bank said the recent elevation in headline inflation was mainly due to gasoline prices, while there had been little evidence of higher energy prices spreading to other components of the economy.
The Bank said shipments through the Strait of Hormuz remain curtailed due to Middle Eastern conflict, and there has been little progress reopening that critical shipping corridor. The Bank said the conflict had kept global oil prices high and contributed to elevated gasoline prices.
Monetary policy cannot offset tariff effects or control global energy prices, which creates limits on what interest-rate decisions can accomplish. US tariffs on Canadian goods create uncertainty about future growth and employment.
The Bank is monitoring how tariff impacts develop and whether energy prices shift before its next scheduled rate decision on October 28. Governor Tiff Macklem stated that the Bank can ensure global developments don’t jeopardize price stability in Canada.
For mortgage holders, the policy rate hold means anyone with a variable-rate mortgage whose rates are linked to lenders’ prime rates will not see a new rate increase based on this decision. Actual mortgage-payment mechanics depend on your lender, mortgage contract, how the prime rate transmits, and your payment structure. For savers, deposit rates offered by banks may not move one-for-one with the Bank’s policy rate.
