What Could the Bank of Canada Do Next? Our Rate Outlook for the Rest of 2026

After holding its policy rate at 2.25% again on July 15, attention is already shifting to the Bank of Canada’s next decision.

The next interest rate announcement is scheduled for September 2, 2026, followed by two more decisions before the end of the year, on October 28 and December 9.

So, what could happen next?

While no rate decision is guaranteed, current economic conditions suggest the Bank of Canada may have room to remain patient.

Why Another Hold Looks Possible

In July, the Bank of Canada maintained its policy rate at 2.25%, explaining that the current level remained appropriate to support the economic recovery while bringing inflation back toward its 2% target.

Since then, Canada has shown some encouraging economic signals.

The labour market delivered a particularly strong result in July, adding more than 75,000 jobs while the unemployment rate fell to 6.4%. Economic growth has also shown signs of improving after a weaker start to the year.

These stronger indicators reduce some of the immediate pressure on the Bank of Canada to lower rates.

At the same time, inflation remains an important part of the equation. The Bank expects inflation to gradually move back toward 2%, but global energy prices, geopolitical uncertainty and Canada’s trade relationship with the United States continue to create risks.

Our Outlook for September

Based on the information currently available, another hold at 2.25% appears to be the most likely scenario for September.

The Bank does not appear to be in a rush to move in either direction.

If economic growth continues to improve while inflation gradually moderates, maintaining the current rate would give policymakers more time to evaluate whether the recovery is sustainable.

Of course, upcoming inflation, employment and economic growth data could change that outlook before September 2.

What About the Rest of 2026?

The bigger question may not be what happens in September, but whether the Bank of Canada changes course at all before the end of the year.

There are three remaining decisions in 2026:

September 2October 28December 9

At this stage, a prolonged period of rate stability looks increasingly possible.

For rates to move lower, we would likely need to see clearer signs of economic weakness alongside continued progress on inflation.

On the other hand, stronger-than-expected growth or renewed inflationary pressure could keep rates at their current level for longer.

The key takeaway is that borrowers should be careful about building their financial plans around the assumption that significant rate cuts are just around the corner.

What Does This Mean for Mortgage Borrowers?

For homebuyers and homeowners, waiting for the Bank of Canada’s next announcement is not always the best strategy.

Variable mortgage rates are influenced directly by changes in the Bank of Canada’s policy rate, while fixed mortgage rates are more closely connected to bond yields and market expectations.

That means mortgage opportunities can change even when the Bank of Canada does nothing.

If you are buying a home, renewing your mortgage or considering a refinance, the more useful question may be:

What makes sense based on today’s options and my financial goals?

Rather than trying to perfectly predict the next rate move, a mortgage strategy should consider your cash flow, timeline, risk tolerance and longer-term plans.

Planning Your Next Mortgage Move?

The remainder of 2026 could bring more clarity around inflation, economic growth and the future direction of Canadian interest rates.

But you don’t necessarily need to wait for the next Bank of Canada announcement to understand your options.

Whether you’re buying, renewing or refinancing, we can review the numbers and help you understand which mortgage strategy makes sense for your situation.

Book a call with us to discuss your mortgage options and prepare for what comes next.