This means the Bank’s overnight lending rate will remain at 2.25%, with the prime rate used by lenders—also set based on this benchmark—staying at 4.45%. This rate acts as the pricing floor for a number of floating rate borrowing products, including variable mortgage rates, HELOCs, and certain types of loans. The rate has now sat at this level since October 2025, when the Bank delivered the last of its nine-rate-cut series.
This latest rate hold is no surprise to market watchers; Canada’s sluggish job market and overall soft economic performance in 2025 have given the Bank little reason to make a move. The latest February Consumer Price Index report, released by StatCan on March 16, also indicates that inflation growth remains below the Bank’s 2% target at 1.8%—all the more reason to stand pat on rate policy.
However, the Bank is facing new geopolitical pressures that may influence rate decisions in the near future; the ongoing war in Iran, and resulting high energy prices, may re-heat inflation to dangerous levels. Should that occur, it could potentially force the Bank to hike rates again, even against a soft economic backdrop (also known as stagflation).
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For the time being, though, the Bank has made it clear that it’s simply “too early” to see how the war will impacts the Canadian economy, and whether it needs to change rates in response. Policymakers will need to see strong evidence that higher inflation is occurring—and here to stay—before passing along any hikes.
“Against this overall backdrop, Governing Council decided to maintain the policy rate at 2.25%. With recent data pointing to weaker economic activity and uncertainty elevated, risks to growth look tilted to the downside. At the same time, inflation risks have gone up due to higher energy prices,” states the Bank’s press release accompanying the rate announcement.
“We will continue to assess the impact of US tariffs and trade policy uncertainty, and how the Canadian economy is adjusting. We are also monitoring the unfolding conflict in the Middle East closely and assessing its impact on growth and inflation. As the outlook evolves, we stand ready to respond as needed.”
What the BoC’s rate hold means if you’re a mortgage borrower
Whenever the BoC makes a rate announcement, it’s those who already have variable-rate mortgages that are most directly impacted, as these are priced based on a plus or minus percentage to the lender’s prime rate. Because the Bank held rates in March, the interest rate, payment size, and portion of payment going towards principal debt won’t change for these borrowers.
If you’re currently considering taking out a variable-rate mortgage, however, it can be a good idea to get your application in sooner rather than later to secure a pre-approval and rate hold. While prime rates won’t change until the BoC makes a move, lenders can still choose to adjust the spread they offer to this key rate, potentially whittling the savings passed down to the customer. Securing a rate hold for up to 120 days will guarantee access to today’s variable-rate pricing, currently at a low of 3.35% for a five-year term.
Fixed mortgage rates, meanwhile, are facing some steep upward pressure. While not directly influenced by the BoC’s rate moves, fixed rates are priced based on bond yields. Those have been steadily on the rise since February, as investors grow more worried about the possibility of a lengthier war that would lead to higher inflation and central bank rates, both of which devalue bond prices. Investors selling off bonds—and driving yields higher—has been steadily happening since February, leading some lenders to increase their fixed mortgage rates.
Of course, if you’re already locked into a fixed rate, this won’t impact you, as fixed interest rates don’t change for the entirety of the mortgage’s term. If you’re currently shopping for a fixed rate, however, or coming up for renewal, the same wisdom stands: securing that pre-approval now will give you more options in case fixed rates increase further in the near future.
What the BoC rate means to Canadians savings
When a central bank holds rates, it can be a good- or bad-news story for mortgage borrowers, depending on their expectations; those holding out for rate relief will be disappointed, while others may benefit from ongoing stability.
For savers and passive investors though, it’s generally a positive development; guaranteed income investments (GICs) and high-interest savings accounts (HISAs) are both based on prime lending rates, meaning their rate of return will rise and fall alongside central bank policy. This latest rate hold means stability and peace of mind for savers, as the interest earned by their accounts and investments won’t change – for now.
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