The Bank of Canada announced on July 15 that it is keeping its policy interest rate at 2.25%. This is the sixth consecutive rate announcement without a change, meaning the policy rate has been sitting in the same chair since October 2025 and apparently has no immediate plans to get up.
For Ottawa homeowners, buyers and anyone approaching a mortgage renewal, the decision provides some short-term stability. However, it does not mean every mortgage rate will remain exactly where it is.
Why did the Bank of Canada hold rates?
Canada’s economy has been weak, but the Bank believes conditions are beginning to improve. It estimates that economic growth picked up during the second quarter, while consumer spending, exports and business investment are showing modest signs of recovery.
The Bank now expects Canada’s economy to grow by only 0.7% in 2026, followed by growth of 1.8% in both 2027 and 2028. The labour market also remains soft, with unemployment sitting at 6.5% in June.
In other words, the economy may be moving forward, but it is not exactly sprinting up Parliament Hill.
What about inflation?
Headline inflation increased to 3.2% in May, largely because of higher gasoline prices connected to the conflict in the Middle East. Once gasoline was removed from the calculation, inflation was much closer to the Bank’s target at 2.2%, while core inflation remained near 2%.
That distinction makes a difference. The Bank does not want to raise interest rates unnecessarily in response to a temporary jump in energy prices, particularly while other parts of the economy remain fragile. Capital Economics also believes the Bank is prepared to look through energy-driven inflation rather than automatically responding with higher rates.
The Bank currently expects inflation to remain elevated over the near term before gradually returning to approximately 2% in early 2027. Of course, that forecast depends heavily on oil prices and global events—two things that have never been especially good at following a tidy schedule.
What does this mean for Ottawa?
Unlike the prairie provinces, Ottawa does not receive the same direct economic boost when oil prices rise. Instead, local households are more likely to feel the downside through higher gasoline, transportation and shipping costs.
Ottawa’s economy also has its own unique mix of influences, including government employment, technology, construction and the broader Ontario housing market. If the national economy remains weak, the Bank may continue to favour patience. However, if energy costs begin spreading into a wider range of goods and services, the possibility of future rate increases cannot be ruled out.
For now, a rate hike does not appear to be the Bank’s preferred direction.
What does the rate hold mean for mortgages?
Because the policy rate did not change, most lenders are unlikely to adjust their prime rates immediately. Borrowers with variable-rate mortgages or home equity lines of credit should therefore see no direct change resulting from this announcement.
Fixed mortgage rates work differently. They are influenced primarily by Government of Canada bond yields, which can move even when the Bank of Canada remains on hold. A rate hold is reassuring, but it does not freeze every mortgage rate in place.
Anyone buying a home in Ottawa, renewing or refinancing should still compare available options rather than waiting for a dramatic rate announcement. Sometimes the best mortgage decision is less about predicting the Bank of Canada and more about choosing the right term, lender and flexibility for your own plans.
Mortgage Broker Advice
The next Bank of Canada rate announcement is scheduled for September 2, 2026. If you have any questions or would like some free personalized advice about how to get a mortgage, please contact me.
