Bank of Canada Keeps Rate at 2.25% as Inflation Concerns Increase
The Bank of Canada held its overnight lending rate at 2.25% on September 2, 2026, keeping it at that level for almost a year. The decision came as GDP grew 3.3% in the second quarter and unemployment edged down to 6.4% in July, while persistently high oil prices and the potential impact of Canadian counter-tariffs raised concerns about broader inflationary pressures. Global inflation concerns have also pushed long-term bond yields higher, contributing to increased fixed mortgage rates.
At the same time, the Bank identified subdued labour demand, excess supply in the economy, and uncertainty around the durability of recent economic gains as factors that could limit inflationary pressure. The Bank said that upside risks to inflation had increased and that it was prepared to adjust monetary policy as needed. While an immediate rate hike is not certain, the possibility has returned for one of the two scheduled meetings before the end of 2026, with the next rate announcement set for October 28.
Read on: CREA
