The Bank of Canada announced on September 2, 2026 that it is holding its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. The next scheduled announcement is October 28, 2026. This decision has direct implications for variable-rate payments and for anyone shopping a fixed term or renewal.

Source: Bank of Canada press release, September 2, 2026.

Why the Bank Held Rates

Governing Council said the economy and inflation were evolving broadly as forecast in the July Monetary Policy Report, so it agreed to leave the policy rate unchanged. At the same time, it flagged higher upside risks to inflation and more uncertain growth because of new tariffs.

Key points from the official release:

• Canadian GDP rose 3.3% in the second quarter after a very weak first quarter; the Bank described the pick-up as broad-based, with some of the strength reflecting temporary factors
• Consumption posted solid gains; housing activity rebounded after several weak quarters; exports and business investment were up sharply
• The unemployment rate edged down to 6.4% in July, but labour demand remains subdued and indicators still point to excess supply
• CPI inflation has been hovering around 3%, mainly because of persistently higher gasoline prices
• Excluding gasoline, inflation was 2.2% in July and measures of core inflation remained close to 2%
• The Middle East conflict is keeping energy prices high; new US tariffs and Canadian counter-measures followed a breakdown in trade talks
• Financial conditions have tightened since July, with long-term bond yields up globally, including in Canada

Governing Council said it will assess the sustainability of the economic rebound and the outlook for inflation, and is prepared to adjust monetary policy as needed. The next Monetary Policy Report will be published with the October 28 decision.

Impact on Mortgage Rates

Variable-rate mortgages are priced off lender prime, which typically moves with the overnight rate. A hold means variable payments should not change solely because of this announcement. Compare live variable rates before you assume a discount to prime will last through October.

Fixed-rate mortgages are priced off bond yields, not the overnight rate. The Bank explicitly noted that long-term yields have moved up since July. A policy-rate hold does not freeze 5-year fixed quotes. Shop the live 5-year fixed hub rather than treating 2.25% as your mortgage rate.

What Should Renewers Do?

If you're renewing before the October 28 decision, start with our renewal calculator and confirm you still pass the stress test qualifier at the contract rate plus the buffer:

Looking Ahead

The Bank did not signal a cut or a hike. It said upside risks to inflation have increased — from still-high oil prices, elevated refinery margins, and new US and Canadian tariffs that could feed into consumer prices over time — while the recovery's sustainability is less certain. Governing Council is prepared to adjust the policy rate as needed.

Until October 28, treat variable as stable versus this hold, and treat fixed as a live quote. For product choice, qualification, and closing costs, see the mortgage guide.