Canada Prime Rates

Bank of Canada Holds at 2.25%, Keeping Canada’s Prime Rate at 4.45%

The Bank of Canada held its policy rate at 2.25% on September 2, 2026, keeping Canada’s prime rate unchanged at 4.45%. This means no immediate rate change for variable-rate mortgages, HELOCs and other loans tied to prime. Canada’s economy strengthened considerably in the second quarter, but excess supply remains. At the same time, persistent energy inflation from the US-Iran conflict and new Canada-US tariffs have increased uncertainty around both inflation and growth. These developments have also shifted market expectations away from further rate cuts and toward the possibility of higher rates in 2027.

What the September Bank of Canada Decision Means for Prime Rates

• With the Bank of Canada 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 tied to prime should see no immediate change in their borrowing rate.
• Canada’s economy grew by 3.3% in the second quarter, with gains in consumer spending, housing activity, exports and business investment.
• The labour market has also improved, with unemployment falling to 6.4% in July. However, the Bank still sees excess supply and subdued demand for labour.
• CPI inflation remains around 3%, largely because the US-Iran conflict continues to keep oil and gasoline prices elevated.
• Inflation excluding gasoline was 2.2% in July, and the Bank’s preferred measures of core inflation remained close to 2%.
• The Bank has seen little evidence so far that higher energy costs are spreading broadly through the economy, but the risk increases the longer high oil prices persist.
• New US tariffs and Canadian counter-tariffs create risks in both directions. They could weaken investment and hiring while also increasing business costs and consumer prices.
• Market expectations have shifted notably. CORRA forwards imply an 80% probability of another hold in October and increasingly point toward a higher policy rate in 2027.
• If the Bank eventually raises its policy rate, Canada’s prime rate would normally rise as well, increasing borrowing costs for households with prime-linked debt.

The Bank of Canada’s September 2 decision keeps Canada’s prime rate at 4.45%, providing short-term stability for borrowers with prime-linked loans. The outlook, however, has become less straightforward. Stronger economic growth and an improving labour market reduce the case for additional rate cuts, while persistent energy inflation and tariff-related costs create pressure in the opposite direction. Excess supply and trade uncertainty still argue for caution. For now, prime remains unchanged, but markets are increasingly pricing higher policy rates in 2027 rather than renewed cuts. The next Bank of Canada rate decision is scheduled for October 28, 2026.

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.