Bank of Canada Holds Rate Steady as Tariff & Energy Risks Rise
The Bank of Canada kept its policy rate at 2.25% on September 2, citing a strengthening economy but warning that US tariffs and elevated oil prices threaten to push inflation above its 2% target, which could delay mortgage relief for renewing homeowners.
The Bank of Canada announced on September 2 that it would hold its benchmark overnight interest rate at 2.25%—where it has remained since October 2025. While Canada's economy showed unexpected strength in the second quarter with 3.3% GDP growth, the central bank raised concerns about geopolitical and trade risks that could spike inflation later this year.
What's Pushing Prices Up?
- Oil prices: The Middle East conflict continues to keep energy costs elevated, which translates directly to higher gas and heating bills for households
- Trade tensions: New US tariffs and Canada's 50% counter-tariffs announced after trade-talk breakdown threaten to push up prices on imported goods
The Bank's official statement noted that while underlying inflation remains near its 2% target, these external shocks carry "upside risks" that could force the central bank to reconsider its stance in coming months. Most renewing homeowners who locked in mortgages during 2024 should expect payments to remain elevated when their terms expire this year, with no immediate relief from rate cuts on the horizon.
If you have a mortgage renewal coming up soon, expect to renew at roughly the same rate or possibly higher if inflation spikes. For renters, the stable-rate environment means landlords have less incentive to freeze or cut rents—consider locking in a lease soon while market conditions remain competitive.
Sources
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