Canada Interest Rate Forecast: What Bank Economists Expect for the Policy Rate and Mortgage Rates

The Bank of Canada’s policy rate is 2.25% (Bank of Canada Valet API, as of October 1, 2026), where it has been since the decision announced on October 29, 2025. The Bank’s next scheduled rate announcement is October 28, 2026. At its September 2, 2026 decision, the Bank said: “Governing Council will assess the sustainability of the economic rebound and the outlook for inflation, and is prepared to adjust monetary policy as needed.”

Canada’s large banks and Desjardins publish their own interest rate forecasts. This page collects the latest ones we could quote from each bank’s own publication, with the date each was published, and what they imply for variable and fixed mortgage rates. The forecasts were collected on October 2, 2026. A forecast is one forecaster’s view on the day it was written, and banks revise them after each rate decision.

Bank of Canada interest rate forecast: bank by bank

Each figure below is the policy rate the forecaster expects at the end of the period shown, taken from its own forecast table.

For the end of 2026 these five forecasts run from 2.25% to 2.50%, and for the end of 2027 from 2.25% to 3.25%, against today’s 2.25%.

Two other large banks are not in the table:

• CIBC Economics: we found no CIBC forecast table newer than its January 5, 2026 Forecast Update to quote. In The Week Ahead for September 14 to 18, 2026, it said the Bank of Canada could “speak tough but defer action until 2027”.
• BMO Economics: BMO publishes its forecast table, Rates Scenario, on economics.bmo.com. We could not capture its current figures from BMO’s own publication, so they are not shown here.

Economists and financial markets can expect different things. TD wrote on September 17, 2026: “we believe the market is overplaying its hand in pricing several and imminent rate hikes by the Bank of Canada.” CIBC’s Week Ahead said: “While markets see the Bank of Canada also stepping in with multiple rate hikes.” What the policy rate is, how decisions are made and how they reach borrowers is covered in the Bank of Canada policy rate explained.

Mortgage rate forecast: what the bank forecasts mean for variable and fixed rates

Most of the forecasts on this page cover the policy rate and bond yields rather than the mortgage rate a lender will offer you; Desjardins also forecasts posted mortgage rates, covered further down. Variable mortgage rates follow the policy rate through prime, while fixed rates are generally benchmarked off bond yields, so they follow different parts of the forecasts.

Variable rates follow the policy rate

Variable mortgage rates are often quoted as prime plus or minus a set amount, and prime moves with the policy rate (see how the prime rate works). The chartered-bank prime rate is 4.45% (Bank of Canada, as of September 30, 2026). Two forecasters also publish a prime rate path:

A variable rate set at a fixed discount from prime would move by as much as prime does. How variable rates are priced and compared is covered in variable mortgage rates in Canada, and what happens to a fixed-payment variable mortgage when rates rise is in the trigger rate explained.

Fixed rates follow bond yields

Fixed mortgage rates are generally benchmarked off 5-year Government of Canada bond yields (see how bond yields affect mortgage rates). The 5-year Government of Canada bond yield was 3.59% on October 6, 2026 (Bank of Canada Valet API, series BD.CDN.5YR.DQ.YLD). The same five forecasters published these end-of-period forecasts for it:

A forecast that keeps the policy rate flat can still have the 5-year yield moving: TD’s table holds the policy rate at 2.25% through 2027 while its 5-year yield goes from 3.50% at the end of 2026 to 3.05% a year later. Comparing fixed offers today is covered in 5-year fixed mortgage rates.

Desjardins’ posted mortgage rate forecast

Desjardins also publishes a forecast of posted mortgage rates by term. Posted rates are the rates the banks advertise, which the Bank of Canada tracks. Desjardins notes: “Retail rate forecasts are based on the historical relationship between retail rates and the borrowing costs of Canadian financial institutions and do not reflect the pricing strategies of Desjardins Group.”

Source: Desjardins Economic Studies, Investment Strategy and Interest Rate Analysis, October 2, 2026; posted rates today from Bank of Canada series V80691333, V80691334 and V80691335.

Borrowers paid less than the posted rate on average: the average rate on insured fixed mortgages of 5 years or more that chartered banks funded, including renewals and refinancing, was 4.05%, and on uninsured ones 4.49%, in July 2026 (Bank of Canada, funds advanced).

How far ahead do the forecasts go?

Searches for a 5-year interest rate forecast for Canada turn up tables running to 2030 or beyond. Most of the bank tables on this page are end-of-quarter forecasts that stop sooner: Scotiabank, RBC, National Bank and Desjardins forecast the policy rate quarter by quarter to the end of 2027, and TD’s table runs to the end of 2028, with the policy rate at 2.25% and the 5-year yield at 2.95%. Desjardins also publishes yearly averages further out: its September 22, 2026 Economic and Financial Outlook (Table 7) has the overnight rate averaging 2.75% in each year from 2028 to 2030, and its October 2, 2026 retail table forecasts the posted 5-year mortgage rate at 5.40% at the end of 2028.

How to read an interest rate forecast

A few details change what a forecast table is saying:

• Publication date. Every figure here is the forecaster’s view on the date shown. A table written before a rate decision or a major event can already be out of date, so compare dates before comparing numbers.
• End of period or average. The tables on this page give the rate at the end of each quarter or year. Some publications show averages instead, which differ from the end-of-period rate when the rate changes partway through the period.
• A base case, not the only case. A forecast is the forecaster’s expected path under its own assumptions, for example about oil prices and trade, and inflation is itself one of the things it forecasts. The publications linked above set out those assumptions and the risks they see.
• Policy rate versus mortgage rates. A flat policy rate forecast does not settle where fixed mortgage rates go, since they are generally benchmarked off 5-year bond yields.
• Economists versus markets. Bank economists and market pricing can disagree, as they did in September 2026 (see above).

US interest rates can also move Canadian bond yields; see how the US Fed affects Canadian mortgages.

How accurate have past forecasts been?

Two published forecasts set against what the Bank of Canada then did show how far off a forecast can be. The actual rates are from the Bank’s record of its rate decisions.

TD’s December 2021 table had the rate rising step by step to 1.75% by the end of 2023; the Bank of Canada instead raised it to 4.25% by December 2022 and 5.00% on July 12, 2023. BMO’s August 2025 table had the December 2025 rate right, then a further cut in 2026 that has not happened. These are two examples, not a scored record of every forecaster. Every rate change since 2009 is listed in the Bank of Canada rate history.

What the forecasts mean if you have or need a mortgage

A forecast can’t tell you what rates will do, so what a different path would cost you can matter as much as which path is forecast. Some ways to use these forecasts:

• Choosing fixed or variable. The trade-offs are covered in fixed vs variable mortgages; the policy rate forecasts above bear on the variable side and the bond yield forecasts on the fixed side.
• Renewing. Renewal options, including switching lenders, are in the mortgage renewal guides.
• Buying. A rate hold can protect a rate while you shop; see mortgage rate holds. To see how a different rate changes a payment, try the mortgage calculator.
• Planning for a downturn. What a recession or a rate shock could mean for a mortgage holder is in recession planning for your mortgage.