Canada Prime Rates

Bank of Canada Holds Policy Rate at 2.25%, Keeping Prime Rate Steady at 4.45%

With the Bank of Canada holding its policy rate at 2.25% on July 15, 2026, Canada’s prime lending rate remains unchanged at 4.45%. This keeps borrowing costs steady for products tied to prime, including variable-rate mortgages, HELOCs and personal lines of credit. Canada’s economy is showing signs of improvement, but the Bank remains cautious as higher gasoline prices keep headline inflation elevated and uncertainty surrounding the Middle East conflict and US trade policy remains high.

What the Bank of Canada’s Decision Means for Prime Rates

• With the policy rate unchanged at 2.25%, major Canadian lenders continue to set their prime rate at 4.45%. Borrowers with variable-rate mortgages, HELOCs and lines of credit should not see an immediate rate change following this announcement.
• Canada’s economy is showing signs of improvement. The Bank estimates that annualized GDP growth strengthened to 2.5% in the second quarter of 2026 after economic activity was roughly flat in the first quarter.
• The economy still has excess supply, and the labour market remains relatively soft. Canada’s unemployment rate was 6.5% in June 2026 and has generally remained between 6.5% and 7% since the end of 2024.
• Inflation rose to 3.2% in May 2026, mainly because of higher gasoline prices linked to the conflict in the Middle East. Inflation excluding gasoline was 2.2%, while the Bank’s measures of core inflation remained close to 2%.
• The Bank expects inflation to remain elevated in the near term before gradually returning to around 2% in early 2027. However, the outlook will depend heavily on what happens to oil and gasoline prices.
• For borrowers, the unchanged prime rate provides short-term stability. However, future rate cuts are not guaranteed, and the Bank has said it is prepared to adjust monetary policy if economic growth or inflation develops differently than expected.
• For savers, the decision does not create an automatic change in savings account or GIC rates. Financial institutions can still adjust their deposit rates independently, and elevated inflation may reduce the purchasing-power return earned on savings.

The Bank of Canada’s decision to hold the policy rate at 2.25% on July 15, 2026, keeps Canada’s prime rate steady at 4.45%. For borrowers with prime-linked products, this means no immediate change in borrowing costs. The Bank believes the current rate is appropriate to support the economic recovery while returning inflation to its 2% target. The direction of prime-linked rates will depend on whether economic growth continues to improve and whether energy-driven inflation eases without spreading more broadly through the economy.

The Prime rate in Canada is currently 4.45%. The Prime rate is the interest rate that banks and lenders use to determine the interest rates for many types of loans and lines of credit. These can include credit cards, HELOCs, variable-rate mortgages, car and auto loans, and much more. If you have any of these loans, changes in the prime rate will also change your debt payments and thus your GDS and TDS ratios.