The current interest rate in Canada is 2.75% as of the most recent interest rate announcement released by the Bank of Canada on June 4th, 2025. This is the policy interest rate also known as the target for the overnight rate which is set by the Bank of Canada.
The policy interest rate impacts short-term interest rates such as the prime rate in Canada.
Bank of Canada interest rate next date
The Bank of Canada has decided to hold the interest rate at 2.75% as announced on June 4th, 2025. This marks the second consecutive interest rate announcement where the key policy rate has remained unchanged. The Bank of Canada will continue to monitor the economy and make rate cuts accordingly. The next interest rate announcement will be on July 30th, 2025.
The previous interest rate announcement was April 16th, 2025 when the interest rate held at 2.75%.
The Bank of Canada releases interest rate announcements eight times a year. This table breaks down the upcoming interest rate release schedule for 2026.
- July 30th, 2025
- September 17th, 2025
- October 29th, 2025
- December 10th, 2025
Interest rate history in Canada
These are the historical changes to the policy interest rate in Canada. The Bank of Canada influences short-term interest rates by changing the policy interest rate also known as the target for the overnight rate.
| Date | Target | Change |
|---|---|---|
| June 4, 2025 | 2.75% | 0.00% |
| April 16, 2025 | 2.75% | 0.00% |
| March 12, 2025 | 2.75% | -0.25% |
| January 29, 2025 | 3.00% | -0.25% |
| December 11, 2024 | 3.25% | -0.50% |
| October 23, 2024 | 3.75% | -0.50% |
| September 4, 2024 | 4.25% | -0.25% |
| July 24, 2024 | 4.50% | -0.25% |
| June 5, 2024 | 4.75% | -0.25% |
| April 10, 2024 | 5.00% | 0.00% |
| March 6, 2024 | 5.00% | 0.00% |
These interest rates are sourced from the Bank of Canada.
Types of interest rates in Canada
There are several important interest rates in Canada, each serving a different function in the financial system.
Overnight rate (policy interest rate)
This is the rate the Bank of Canada targets for overnight lending between major financial institutions. It is the most influential rate in Canada because it drives all other short-term rates. The current overnight rate is 2.75%.
Prime rate
The prime rate is set by commercial banks, typically at the overnight rate plus 2.20%. It serves as the benchmark for variable-rate mortgages, HELOCs, and lines of credit. The current prime rate is 4.95%.
Fixed mortgage rates
Fixed mortgage rates are tied to Government of Canada bond yields rather than the overnight rate. The 5-year Government of Canada bond yield is the primary benchmark for the popular 5-year fixed mortgage term. Fixed rates can move independently of the overnight rate. See current mortgage rates for the latest fixed-rate offerings.
GIC rates
GIC rates are influenced by both the Bank of Canada rate and bond yields. When the overnight rate rises, GIC rates typically follow. Longer-term GICs tend to track bond yields more closely.
Savings account rates
High-interest savings account (HISA) rates generally follow the overnight rate closely but with a lag. Banks adjust savings rates after Bank of Canada announcements, though not always by the full amount.
Bank rate and deposit rate
The Bank of Canada also sets a bank rate (overnight rate + 0.25%) and a deposit rate (overnight rate − 0.25%). These form the upper and lower bounds of the overnight lending corridor and are less commonly referenced by consumers.
How interest rates affect the economy
Interest rates are the Bank of Canada’s primary tool for managing the economy. The impacts ripple through virtually every area of financial life.
When rates rise
- Borrowing becomes more expensive — Monthly payments on variable-rate mortgages, HELOCs, and lines of credit increase
- Spending slows — Higher borrowing costs discourage consumers and businesses from taking on new debt
- Housing market cools — Higher mortgage rates reduce mortgage affordability, which can slow home price growth
- Savings become more attractive — Higher GIC rates and savings account yields encourage saving
- Inflation tends to decrease — Reduced spending takes pressure off prices
When rates fall
- Borrowing becomes cheaper — Variable-rate loan payments decrease, making debt more affordable
- Consumer spending increases — Lower borrowing costs encourage purchases and investment
- Housing activity rises — Improved affordability can stimulate home buying
- Savings yields decrease — Returns on GICs and savings accounts fall
- Economic growth is stimulated — Cheaper credit encourages business investment and job creation
Rate forecasting and market expectations
While no one can predict interest rates with certainty, several indicators help gauge the direction of future rate movements:
- Bond yields — The Government of Canada 5-year bond yield is a forward-looking indicator. When bond yields fall, it often signals market expectations of future rate cuts.
- Interest rate swaps — Financial markets price in expected rate changes through the overnight index swap (OIS) market. These are a reliable indicator of market consensus.
- Inflation data — The Consumer Price Index (CPI) released monthly by Statistics Canada is the Bank’s primary target. Inflation consistently above 2% may signal rate increases, while below-target inflation may signal cuts.
- Employment reports — The monthly Labour Force Survey shows employment trends. Rising unemployment often leads to rate cuts to stimulate the economy.
- Bank of Canada communications — The Monetary Policy Report and the Governor’s press conferences provide forward guidance on the Bank’s thinking.
How to position for interest rate changes
Understanding the rate environment can help you make better financial decisions.
In a falling rate environment (like 2024–2025)
- Consider a variable-rate mortgage — Variable rates benefit directly from rate cuts. If you expect further cuts, a variable-rate mortgage through our mortgage calculator lets you model potential savings.
- Lock in GIC rates now — If rates are expected to fall further, locking in current GIC rates for longer terms secures today’s higher yields.
- Refinance existing debt — Lower rates may make it worthwhile to refinance your mortgage or consolidate debt. Check with our mortgage refinance calculator.
In a rising rate environment
- Choose a fixed-rate mortgage — A fixed rate protects you from payment increases. Compare terms with our mortgage rates page.
- Pay down variable-rate debt — Prioritize paying down HELOCs, lines of credit, and variable-rate loans before rates rise further.
- Take advantage of higher savings yields — Rising rates mean better returns on savings accounts and GICs.
- Keep shorter GIC terms — Shorter-term GICs allow you to reinvest at higher rates as they mature.
Related calculators
- Mortgage Calculator — Model your mortgage payments at different rate scenarios
- GIC Calculator — Calculate returns on GIC investments
- Investment Calculator — Project long-term investment growth
- Mortgage Affordability Calculator — See how rate changes affect what you can afford
- Prime Rate — Track the current Canadian prime rate and its history