December update: 100% of economists surveyed in Finder B.O.C interest rate report predict a rate hold at December 10 announcement.
Finder: Bank of Canada Interest Rate Forecast Report
The Bank of Canada (BoC) sets the official overnight rate — the benchmark target rate used by banks, credit unions and lenders to establish interest rates. This benchmark rate greatly impacts savings accounts, mortgages, interest rates charged on personal and car loans and other forms of debt, including credit cards and lines of credit.
On October 29, 2025, the BoC reduced the target benchmark interest rate to:
2.25%
The next BoC interest rate decision is on:
December 10, 2025
Of the experts surveyed in the Finder: Bank of Canada Interest Rate Forecast for the October 29 Policy Rate announcement:
100% predict the policy rate will be held at 2.25%
Latest BoC benchmark interest rate analysis from the experts
Finder regularly polls economists, analysts, professors and industry experts to forecast the Bank of Canada’s next interest rate decision. Here are the most recent overnight rate predictions from Finder’s economic expert panel:
"The Bank of Canada is expected to hold its policy rate as stronger than expected GDP growth and a stable job market offset lingering concerns about sticky core inflation. With inflation within target but underlying pressure persisting amid uncertainty, and the Fed also holding steady, the Bank is likely to take a cautious pause to assess economic momentum and inflation dynamics."
"The Bank will probably pause to assess the impact of holiday season on inflation and the overall economy. All that in light of the economy slowly recovering at the moment."
"The Bank indicated at its October meeting that it is nearing the end of its cycle of cuts. The economy continues to show resilience, outperforming expectations whether in the labour market or with GDP data, so the Bank is likely to postpone any interest rates deep into 2026."
"The Bank of Canada explicitly stated in their previous meeting that they are comfortable leaving the policy where it’s at given their expectations for the company and inflation. Recently released data has not materially deviated from the Banks script so it’s highly likely the Bank will remain on pause."
"Time for a pause and additional "will do no good". Besides as was reported yesterday the Canadian economy did a lot better than early estimates suggested."
"Employment was surprisingly strong in Sept and Oct, inflation was a bit higher than expected, and GDP was solid in Q3... all reasons to move to the sidelines."
"There is so much uncertainty about new developments in the US Canada trade war. Negotiations are stalled and it is uncertain as to when will they start and what prospects could be expected. The Canadian economy is already beginning to experience the negative consequences of these tariffs at home and broad. The BoC took a cautionary attitude and halted rate changes. It seems that cautionary attitude would continue."
"Not much has happened since the last meeting. What we have seen has been mostly better than expected, but too soon to reverse course and raise the policy rate, especially with the uncertainty of CUSMA negotiations hanging over the economy."
"The BoC was very clear in its prior statement that they felt the policy rate was as at an appropriate level. That signalled a prolonged pause. Developments since then likely strengthened their case to be on hold."
"After reducing the policy rate to 2.25% in October, we believe the Bank of Canada is done cutting rates for a while. The Governing Council reckons the current level is at about the right level to support the economy during the trade disruption and keep inflation contained, which aligns with our view."
How low is the overnight rate expected to go over the next 12 months?
When asked how low the overnight rate will go over the next 12 months, 45% of economists surveyed in the September 2025 Finder report believe the rate will drop to 2.00% by September 2026.
What is the Bank of Canada’s official policy interest rate?
The BoC does not set monetary policy; however, Canada’s central bank works with the federal government to establish monetary policy, and the primary tool used by the BoC is to make changes to the overnight target rate. By adjusting the target for the overnight rate, the BoC influences short-term interest rates — with an almost immediate impact on all variable-rate credit instruments, including lines of credit, personal loans, credit cards, mortgage rates and interest earned on savings accounts.
The BoC can adjust the overnight rate at any of its eight fixed-date interest rate announcements.
How the official BoC benchmark affects interest rates
While a change in the BoC’s target rate does not impact consumers directly, it does trigger a change in the interest rate that banks and other institutions use for loans, mortgages and other forms of credit. A change in rates can also impact savers, as interest rates on savings accounts and GICs also fluctuate with the overnight rate.
Still, for the average Canadian, the BoC target rate can be useful. When the BoC moves to lower the target rate, it signals that it wants to help stimulate the economy. The theory is that by making it cheaper to borrow money, there’s a boost in borrowing and spending. An increase in the overnight rate makes borrowing money more expensive but helps savers earn more.
The Bank of Canada adjusts the target rate in response to various economic conditions, including data regarding: inflation, unemployment rates and global economic factors.
How does the BoC interest rate decision affect your finances?
The BoC can take three actions during an interest rate announcement: Raise, lower or hold the target rate.
The Bank of Canada adjusts the target rate in response to various economic conditions, including data regarding: inflation, unemployment rates and global economic factors.
Raise interest rates
When the BoC raises the overnight rate, almost all lenders will pass on this rate hike to borrowers. This increase will impact all variable-rate loans, including mortgages, lines of credit, payday or short-term loans and interest earned on savings accounts. For instance, if the BoC raises the overnight rate by 25 basis points, then most borrowers will see a 25 basis point increase in their variable-rate mortgage. However, homeowners with a fixed-rate mortgage will not be impacted by this rate change, as the rate is locked in for the duration of the mortgage contract (known as the term).
For savers, a rate increase can also prompt an increase in interest rates offered on savings accounts, high-interest savings accounts, and GICs.
Typically, banks and other institutions will pass on rate increases to credit faster than rate increases to savings products.
Drop interest rates
When the BoC lowers the overnight rate, most lenders will pass on some or all of this rate cut to borrowers. Like a rate increase, a rate cut will impact variable-rate loans, including mortgages.
A rate cut will also reduce the interest earned on savings accounts and GICs.
Hold interest rates
When the BoC decides to hold the overnight rate it means no change to interest rates.
Typically, this is done when the BoC is waiting to see how economic factors are unfolding both within Canada and around the world. Another reason is that the BoC is on target — which means the current inflation rate is between 1% and 3%.
Expert Opinion: What does a rate reduction mean for Canadian borrowers?
June’s inflationary pressures easing in Canada and the US signals possible rate cuts next week, providing some immediate relief to Canadian borrowers holding variable and adjustable mortgages. Canadian bond yields continue to lower due to pressures from US yields, which could lead to lower fixed mortgage rates in the weeks and months ahead. With a slew of studies showing the limited housing supply in the country, we expect lower rates could prompt Canadian consumers to move off the sidelines, giving them peace of mind to lock in their mortgage or renewal over the year.
Chase Belair – Co-founder and Principal Broker at nesto
Example: How a rate hike or cut can change your variable-rate loan repayments
If the loan you negotiated with your lender charges a variable interest rate, then your payments can fluctuate when the Bank of Canada changes the overnight rate.
For instance, if you negotiated a five-year car loan of $25,000 in August 2023, with a variable rate of prime plus 1.50%, then your monthly repayments would be just over $511. (The bank prime rate is 7.2%, as of September 1, 2023, making the interest charged on this loan 8.7%).
⬆️ If the overnight rate rises by 25 basis points your car loan interest rate would increase to 8.95% and increase your monthly car loan repayment to just over $514 — an extra $2.80 per month or $33.60 per year.
⬇️ If the overnight rate decreases by 25 basis points your interest rate would fall to 8.45% and monthly repayments could fall to under $508 — a reduction of $2.80 per month or $33.60 per year.
You can find variable interest rates on mortgages, credit cards, personal loans, car loans, business loans, derivatives and corporate bonds.
Example: How a rate hike or cut can change your variable-rate mortgage payments
As a homeowner, you negotiated a 5.5% variable rate on a $450,000 mortgage for a 5-year term (based on an amortization of 25 years).
Based on your initial home loan contract, your monthly mortgage payment is just under $2,765.
⬆️ If the overnight rate rises by 25 basis points your interest rate would increase to 5.75%. Your monthly mortgage payment would increase to just over $2,830 — an extra $65 per month or $780 a year.
⬇️ If the overnight rate decreases by 25 basis points your interest rate would fall to 5.25%. Your monthly mortgage payment would decrease to approximately $2,695 — a reduction of $70 per month, for a savings of approximately $840 a year.
More questions about the Bank of Canada's interest rate
Interest rates fluctuate all the time. The interest rate dictates how much it costs to borrow money. Like most services, this cost of borrowing will change based on the market. However, market forces also dictate whether or not interest rates will rise or fall. For instance, if analysts are uncertain about near or long-term economic forces, this can prompt lenders to be more careful about lending, which can increase interest rates. That said, various market forces can influence interest rates, such as economic growth, international trade and inflationary pressures.
Analysts and experts at the Bank of Canada (BoC) will monitor, assess and run predictive models to determine whether or not to influence Canada's monetary policy using the Bank's target rate (aka: overnight rate). The BoC uses the target rate to influence what lenders charge on variable-rate loans, such as variable-rate mortgages, lines of credit, and interest earned on savings accounts. When the BoC wants to stimulate the economy, they will lower the overnight rate, which prompts a drop in interest rates. If the BoC wants to help cool the economy, there is a hike in the target rate, prompting an increase in variable interest rates.
The Bank of Canada is the country's central bank. The BoC's main role is to monitor and promote the economic and financial welfare of the country, as defined by the Bank of Canada Act.
The BoC has five main areas of responsibility:
Monetary policy: The Bank will use monetary policy to influence the supply of money circulating in the economy with the aim of keeping inflation low and economic growth stable.
Financial system: The BoC will take actions to promote safe, sound and efficient financial systems within Canada and internationally. In this way, the BoC will conduct transactions in financial markets supporting these objectives.
Currency: The BoC designs, issues and distributes Canada's bank notes.
Funds management: The Bank of Canada is the "fiscal agent" for the Government of Canada, managing its public debt programs and foreign exchange reserves.
Setting the official overnight rate is one of the Bank's key monetary policy tools. The Bank will announce potential rate changes during one of eight annual, pre-scheduled rate announcements. Based on current economic data and BoC analysis, the Bank will either cut, raise or hold the overnight interest rate.
The Bank of Canada sets eight scheduled dates each year, where it announces the setting for the overnight rate target. The announcement is followed by a press release explaining the factors behind the decision.
About Finder
Finder is a personal finance comparison site with a mission to help Canadians save, invest, spend wisely and grow their wealth. Each month, Finder provides half a million Canadians – and more than five million globally – with independent and trustworthy financial information. Our goal is to help people make better financial decisions by providing objective, comparative insight on thousands of products and services.
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Finder is available to consumers in Canada, Australia, America and the United Kingdom. Initially launched in 2006 by three Australians – Fred Schebesta, Frank Restuccia and Jeremy Cabral – Finder's global reach now includes thousands of products and services in hundreds of financial categories and provides expert content and independent reviews to more than five million users each month.
Romana King was the Canada group editor at Finder and a personal finance expert. As an award-winning personal finance writer and real estate expert, she has spent almost two decades helping Canadians make smarter money management decisions. Her first book, House Poor No More: 9 Steps That Grow the Value of Your Home and Net Worth, launched in November 2021, continues to be an Amazon bestseller and won the Excellence in Financial Journalism Book Award in 2022.
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