The Bank of Canada interest rates remain unchanged at 2.25%, signaling stability during what the central bank calls a period of “structural adjustment.” With inflation easing, the labour market improving slightly, and global uncertainty still high, this decision offers both clarity and caution as Canada moves into 2026.

Why the Bank Held Rates at 2.25%

The Bank of Canada pointed to several economic factors that shaped the decision:

• Stronger-than-expected GDP growth at 2.6% in Q3
• Flat domestic demand, suggesting cautious consumer behaviour
• Improving employment numbers, with unemployment dipping to 6.5%
• Inflation trending near its 2% target, sitting at 2.2% in October

Taken together, these trends suggest the current bank of canada interest rates level is appropriate to keep inflation stable while supporting economic adjustment.

What Governor Means by “Structural Adjustment”

Governor Tiff Macklem emphasized in his remarks that rising U.S. trade friction, specifically tariffs on steel, autos, aluminum, and lumber has reshaped how Canadian industries operate. This shift is not temporary.

He described it as “more than a cyclical downturn, it’s a structural transition.”

In other words, higher costs, slower productivity, and more cautious investment are likely sticking around for a while. Interest rate stability helps the economy adapt without adding extra pressure on households and businesses.

Where Inflation Is Headed

Inflation has been close to the 2% target for over a year.
In October:

• Gasoline prices fell
• Food price increases moderated
• Core inflation remained between 2.5% and 3%

This controlled inflation environment supports the decision to keep the bank of canada interest rates steady for now.

How This Impacts Canadians

For Borrowers

A pause in rate changes means:

• Mortgage rates remain predictable
• Variable-rate holders get short-term relief
• Businesses can plan borrowing costs with more confidence

For Savers

High-yield savings accounts and GIC returns won’t see major changes yet, but the outlook suggests stability before any potential adjustments in 2026.

Looking Ahead: Opportunities Growing in 2026

The Bank of Canada expects weak GDP growth to close out 2025, but momentum is set to build in 2026. Increased government spending especially in defense is expected to help strengthen demand, while improved hiring conditions and stable inflation offer a more predictable environment for Canadians making major financial decisions.
The next rate announcement on January 28, 2026, will give buyers, sellers, and investors even more clarity on how bank of canada interest rates may evolve as economic trends unfold.

What This Means for Buyers and Sellers

With the Bank of Canada interest rates holding steady at 2.25%, the market is entering a period of stability, something buyers and sellers have been waiting for. Predictable borrowing costs, easing inflation, and a calmer economic outlook create an ideal window for Canadians to plan their next move with confidence. For the real estate market, consistent interest rates help support steady activity; giving buyers a clearer path for planning and giving sellers more certainty in today’s market conditions. As inflation trends lower and employment data continues to improve, the housing market is well-positioned to remain resilient.

A steady rate does not mean the market is standing still. In fact, stability often brings renewed activity:

• Buyers can take advantage of consistent mortgage conditions before any future adjustments.

• Sellers benefit from a more confident pool of motivated purchasers who have clearer expectations.

• Investors have a strategic opportunity to enter or expand while the market sits on firm footing.
As Canada transitions into 2026, this pause is less about holding back and more about setting the stage for smarter decisions and stronger outcomes.
The market is moving, the rate is stable, and informed decisions today can lead to real advantage tomorrow.

Thinking About Buying or Selling?

Now could be the ideal moment to make your move. Whether you’re entering the market, upgrading, or exploring investment opportunities, the latest TRREB Market Watch data shows that informed decisions can create a real advantage in today’s market.

Contact The Daryl King Team to discuss your real estate goals.
Ask us about our exclusive listings and pre-construction opportunities across the GTA.
Subscribe to our newsletter for monthly market insights and updates.