The Bank of Canada maintained its overnight rate at 2.25% on September 2, keeping borrowing costs at the level set in October 2025 as policymakers navigated a resilient domestic economy and escalating global trade tensions. According to the Bank of Canada, the decision leaves the overnight rate unchanged, with the Bank Rate at 2.5% and the deposit rate at 2.20%.
Economic Context and the Tariff Impact
The central bank’s governing council opted to keep rates steady following second-quarter gross domestic product growth of 3.3% and a July unemployment rate of 6.4%, according to data cited by the Bank of Canada. Governor Tiff Macklem stated during a press conference that the economy entered the latest wave of U.S. tariffs on August 22 on better footing than anticipated because businesses have adapted to an environment of higher trade barriers.
However, the central bank warned that new U.S. tariffs, planned Canadian counter-tariffs set for September 8, and elevated global oil prices tied to the conflict in the Middle East are increasing upside risks to inflation. Canada’s Consumer Price Index hovered around 3% recently, driven largely by gasoline prices, while core inflation remains closer to the bank’s 2% target. Macklem noted that monetary policy cannot directly offset tariff effects or global energy prices, but the bank’s primary focus remains safeguarding price stability.
Mortgage Pressures and Delinquency Trends
For Canadian homeowners navigating mortgage renewals, the steady rate offers no immediate payment relief. According to the Canada Mortgage and Housing Corporation (CMHC), homeowners who renewed their mortgages over the past 18 months absorbed an average payment increase of $375 a month, with 35% reporting real budget pressure.
CMHC data also highlights tightening conditions beneath the surface. The national 90-day-plus mortgage delinquency rate rose to 0.24% in the fourth quarter of 2025, up from 0.21% a year earlier, while delinquencies in the Toronto area jumped 45% year-over-year. Despite these increases, the share of homeowners worried about making payments fell to 39% this year from 53% in 2025 as the peak of the pandemic-era renewal wave subsided, according to the CMHC Mortgage Consumer Survey.
Market Outlook and Expert Perspectives
Financial analysts suggest the central bank’s primary concern remains anchored to inflation rather than growth stagnation. RBC chief economist Frances Donald observed that Governor Macklem prioritized the multiple risks in play rather than signaling imminent rate cuts or hikes. Donald noted that the current economic momentum gives the central bank room to monitor how trade tensions work through the economy before adjusting policy.
Savers continue to benefit from the hold, as Guaranteed Investment Certificates and high-interest savings accounts track the overnight rate. Meanwhile, the Bank of Canada’s next scheduled interest rate decision and updated Monetary Policy Report will take place on October 28, 2026.
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