Bank of Canada Holds Policy Rate at 2.75% – What It Means for You

📅 Updated: June 4, 2025

What Happened?

The Bank of Canada has decided to keep its interest rate steady at 2.75%. This means there’s no immediate change in mortgage rates, loans, or credit cards for most Canadians.

Why it matters: This decision signals stability—the Bank is watching global events (especially U.S. trade policies) and waiting before making any big moves.

Why Are Rates Staying the Same?

• Inflation is cooling down. Consumer inflation dropped to 1.7% in April, thanks in part to the removal of the federal carbon tax.

• But prices (excluding taxes) rose 2.3%, slightly more than expected.

• The economy grew 2.2% in early 2025—but that was mostly due to temporary boosts like U.S. export rushes and stockpiling.

• Unemployment has risen to 6.9%, and housing market activity has slowed.

  
  

In short: The economy is not strong enough to raise rates, but not weak enough to cut them either. So, the Bank is taking a “wait and see” approach.

What This Means for Homebuyers & Homeowners

• Good news if you have a variable mortgage—your payments won’t go up (yet).

• Fixed mortgage rates may stay stable in the short term.

• For first-time buyers: this rate hold keeps affordability steady—great timing, especially if you're combining it with the new GST Rebate for First-Time Buyers!

  
  

What’s Next?

The Bank will wait for more clarity on:

• U.S. trade policy

• Canadian business investment & jobs

• How inflation expectations evolve

No rate cuts (or hikes) expected until late 2025—unless the economy shifts.

The Bank of Canada is playing it safe—for now. That’s a good sign if you're thinking about buying a home, renewing your mortgage, or planning your finances this year.