Data as of:2025-Q3
Fetched:
Source:Statistics Canada
Status:LIVE
Bank of Canada
Hold (Ease Bias)Policy Rate: 2.25%
- BoC paused after 275 bps of cuts since June 2024.
- Inflation at 2.2% is within the target range.
- Macklem signaled data-dependent approach for 2026.
Since:
Next meeting:
Last change:-25 bps
Neutral rate:Not available
Decision lens for borrowers: variable vs fixed
How mortgage rates are set here
Variable
BoC Policy → Prime → Variable Mortgage
Bank of Canada sets the overnight rate. Canadian banks adjust prime rate in lockstep (prime is typically overnight + 2.2%). Variable mortgages and HELOCs reprice immediately with prime moves.
Fixed
5Y GoC Yield / Swap Curve → Fixed Mortgage
Fixed mortgage rates track 5-year Government of Canada bond yields plus a lender spread. Bond markets often anticipate BoC moves, so fixed rates can shift before the central bank acts.
Decision lens
Base Case
- BoC began easing in mid-2024 as inflation returned to target range.
- Expect further gradual cuts toward neutral rate (estimated 2.5-3.0%).
- Variable mortgage payments likely to decline meaningfully over 12-24 months.
- Housing market stabilizes as borrowing costs ease.
Faster Cuts If…
- Per-capita GDP contraction deepens, signaling broad economic weakness.
- Unemployment rises faster than expected above 6.5%.
- Housing market correction accelerates, dampening wealth and spending.
- Global disinflationary forces intensify.
Higher-for-Longer If…
- Shelter inflation (rents, mortgage interest) stays elevated.
- CAD weakens sharply, importing inflation via higher import costs.
- US rates stay higher for longer, limiting BoC divergence room.
- Trade policy uncertainty or tariff escalation impacts Canadian exports.
Signals to watch
- Monthly CPI and BoC core measures (CPI-trim, CPI-median)
- Employment reports and wage growth
- BoC announcements and Monetary Policy Report
- 5Y GoC bond yields
- Housing sales, prices, and inventory levels
Scenario-based macro commentary, not financial advice.
Currency & FX Lens
USD/CADFX SnapshotLIVE
USD/CAD1.3893
1M change+0.44%
12M change-3.35%
Federal Reserve (FRED)•
FX data is 9 days old. Daily rates typically update within 1-2 business days.
Why it matters for borrowers
- FX → import prices → inflation: A weaker local currency raises import costs, pushing inflation higher.
- FX → central bank reaction function: Currency pressure can constrain rate cuts even when growth slows.
- Mortgage lens: FX → inflation → policy rate → variable rate; FX → risk premia/bond yields → fixed rate.
FX drivers to watch
- Terms of trade / commodity prices
- Interest rate differentials vs USD (Fed policy)
- Global risk sentiment (risk-on/risk-off flows)
- Trade policy developments and tariff uncertainty
- Trade balance and export demand
How variable vs fixed moves in Canada
Variable
- Linked to Bank of Canada policy rate → prime/base rate
- Adjusts relatively quickly when central bank moves
Fixed
- Priced off government bond yields + lender spreads
- Can move independently of policy rate based on bond market expectations
Central bank→Short rates→Variable mortgages
Bond yields→Funding costs→Fixed mortgages
For advisors & borrowers
Choosing Variable
When it tends to fit
- When rates are expected to decline over the term
- For borrowers comfortable with payment variability
- When starting rates are meaningfully lower than fixed
Main risks
- Payments rise if cuts are delayed or reversed
- Budget uncertainty during volatile periods
Choosing Fixed
When it tends to fit
- When prioritizing budget stability
- For risk-averse borrowers preferring predictability
- Long-term planning horizons
Main risks
- Opportunity cost if variable rates drop faster
- Break penalties if refinancing early
General guidance based on current regime. Not personalized financial advice.
Recent releases
| Date | Metric | Value | Δ | Source |
|---|---|---|---|---|
| Dec 17 | CPI (YoY) | 2.2% | +0.1% | StatCan |
| Dec 06 | Unemployment | 6.4% | +0.1% | StatCan |
| Oct 30 | BoC Rate | 2.25% | -25bps | BoC |
Quarterly %
Source: Statistics Canada • 2025-Q3
•Statistics CanadaLIVE
CPI YoY %
Source: Statistics Canada • 2025-11
•Statistics CanadaLIVE
Treasury rates
What this curve suggests
- The curve has a normal upward slope, typical of expansion.
- Long-term rates reflect moderate inflation expectations.
- Yield curve shape can change rapidly with policy shifts.
Source: Bank of Canada • 2026-01-15
•Bank of CanadaLIVE
Coverage: 2020–2024
Annual data typically lags. Latest available: 2024
| Year | GDP | Debt/GDP | C/A | Savings | Budget | CPI |
|---|---|---|---|---|---|---|
| 2024 | $2.2T | 106% | -0.4% | 5.8% | -1.5% | 2.5% |
| 2023 | $2.1T | 107% | -0.5% | 6.2% | -1.3% | 3.9% |
| 2022 | $2.0T | 105% | -0.3% | 5.0% | -1.0% | 6.8% |
| 2021 | $1.9T | 110% | 0.1% | 11.0% | -4.0% | 3.4% |
| 2020 | $1.7T | 118% | -1.8% | 18.0% | -15.0% | 0.7% |
Value added by sector · Latest available: 2023