What to expect from the upcoming Bank of Canada interest rate update
Canadians are in for another Bank of Canada (BoC) interest rate announcement next week amid ongoing economic uncertainty.
The country’s central bank held its key interest rate at 2.75 per cent for the second time this year in June in its first update since Prime Minister Mark Carney’s snap election win.
Canada has made two 0.25 per cent cuts to its key interest rate so far, with the last one on March 12.
The Crown corporation cited heightened political and economic tensions as the reason for the consecutive rate holds.
Since its first interest rate hold of the year in April, the BoC says the U.S. administration has been back and forth with various tariffs, stepping back from extremely high tariffs with China, while bilateral trade negotiations have begun with several countries.
Taking into account the unpredictability of U.S. tariffs, the softer, but not weaker, Canadian economy, and “unexpected firmness” in the latest inflation data, the Bank of Canada decided to hold the interest rate as it gains more information on U.S. trade policy and its impacts.
“We are focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval,” stated the Governing Council. “We will support economic growth while ensuring inflation remains well-controlled.”
Ratehub.ca mortgage expert Penelope Graham shared her predictions for the announcement coming on Wednesday, July 30.
As political and economic tensions persist, here’s what you can expect.
Will the Bank of Canada hold the interest rate?
Jo Panuwat D/Shutterstock
Graham said the most recent economic data, including the June inflation and jobs numbers, have given the BoC “little rationale to cut rates now.”
According to Statistics Canada, the inflation rate in June rose slightly to 1.9 per cent, up from 1.7 per cent in May.
“Core inflation measures remain sticky and well above the Bank’s 2 per cent target. As well, improving consumer and business sentiment in the wake of tariffs indicates a sense of tentative stability,” explained Graham. “This builds the case for the Bank to enter a holding pattern in its neutral range, rather than continue its cutting cycle.”
She added that the United States-Canada tariffs spat still poses a risk.
“A firm trade deal between Canada and the U.S. hasn’t yet been reached, and key industries, such as the manufacturing and automotive sectors, are struggling under the tariffs in force,” said Graham. “The Bank will continue to be highly data dependent and has space to pass along another cut if an economic downturn warrants it, whether this year or early in 2026.”
How mortgage rates and housing could be affected
Canadians on fixed mortgage rates could be in for some more rate hikes.
“The government of Canada five-year bond yield, which underpins the pricing for five-year fixed mortgage rates, has increased to a six-month high, in the 3 per cent range. This is largely in response to inflation concerns, as both the Canadian and American June prints surprised on the upside,” explained Graham. “As a result, a number of lenders have increased their fixed mortgage rates, and could be poised to hike them further.”
While Canadians may have enjoyed a homebuyers’ market these past few months, the mortgage expert believes that’s about to end.
According to her, fixed mortgage rates are increasing, variable rates are about to stagnate, and there are signs that the housing market is about to heat back up.
“This means the current affordability conditions enjoyed by buyers are starting to deteriorate. It’s more important than ever to secure a rate hold or full pre-approval when rate shopping to secure access to today’s mortgage pricing,” she advised.
Those keen on staying on the pulse of the market should follow the BoC’s X account and look at morning updates on the following dates:
- Wednesday, July 30, 2025 (rate update, monetary policy report, and commentary)
- Wednesday, Sept. 17, 2025 (rate update only)
- Wednesday, Oct. 29, 2025 (rate update, monetary policy report, and commentary)
- Wednesday, Dec. 10, 2025 (rate update only)
All announcements typically drop at 9:45 a.m. ET (6:45 a.m. PT). You can also subscribe here for email updates.
Keep up with what experts think about Canadian markets and upcoming interest rate updates on Daily Hive.