At its June 10, 2026 meeting the Bank of Canada left its policy rate unchanged at 2.25%, the fifth hold in a row. It is holding because the economy is weak enough to argue for a cut, and inflation, driven by oil and gasoline, is strong enough to argue against one. So it waits.
I am Moe Asgarian, a Principal Real Estate Broker with RE/MAX in Toronto, ranked number 47 worldwide and in the top 1% in Canada. I follow these decisions closely because they set the cost of every mortgage my clients sign.
Why the Bank of Canada Held the Rate at 2.25% in June 2026
The June 10, 2026 decision was the fifth consecutive hold, leaving the policy rate at 2.25%. The Bank is caught between two problems that pull in opposite directions. On paper the Canadian economy has entered a recession, which would normally argue for cheaper money. At the same time inflation is serious, and the main driver is the rising price of oil and gasoline. Lower growth and higher prices at once. So the Bank has kept its hands still until the picture gets clearer.
Based on the bank analyses and the economists I follow, I think the rate probably stays at 2.25% through the end of 2026. That is my read as of June 2026, not a promise.
Canada's Recession on Paper in Early 2026
Canada saw an unexpected contraction in the first quarter of 2026, following the same pattern as the fourth quarter of 2025. That is what puts the word recession on the table. I want to be honest about the size of it, though. The fall in GDP from the fourth quarter of 2025 to the first quarter of 2026 was very slight measured against the size of the Canadian economy. On paper we are shrinking. In daily life it does not feel like a collapse.
Mr Carney addressed this in an interview shortly before June 2026. He said one of the main reasons Canada grew as fast as it did in past years was the large number of immigrants arriving. Now that the government has slowed immigration and made it harder, economic growth has slowed with it, and that is part of how we arrived in a recession.
The May 2026 Jobs Numbers
The labour market surprised people. Canada added 88,000 new jobs in May 2026, the first significant hiring increase since November of the previous year. In May 2026, the overall unemployment rate fell from 6.9% to 6.6%. Construction alone added 26,000 jobs in May 2026, which matters directly to housing.
I would not celebrate too hard. Year over year in May 2026, hiring was up only 0.7%. What really happened is that the job market recovered some of what it had lost earlier, not that it started booming. Still, plenty of people took heart from those numbers in June 2026, which tells you how much of this market is running on expectation.
What Could Move the Rate Next: Oil, the War, and the Tariff Talks
The clearest trigger is oil. If oil gets cheaper over time, Canada could see rate cuts again in 2027. The inflation problem as of June 2026 is tied to the war involving Iran and to what happens with the Strait of Hormuz, and nobody can tell you how that resolves.
The second trigger is trade. The Bank is waiting on the outcome of talks between Canada and the United States. If Mr Carney's government cannot reach a tariff agreement with Mr Trump's government, the odds of rate cuts starting in early 2027 go up, and it could even happen slightly sooner. Add the effect of federal infrastructure plans on growth, and you have a handful of open questions that will decide the next move.
What a Flat Rate Means for Toronto Buyers and Sellers
Here is what I tell my clients in June 2026. A policy rate sitting still at 2.25% as of June 2026 means your borrowing cost is not about to change by accident, so the pressure to rush is lower than it was in the sharp rate years. The Bank is waiting, and frankly the Toronto housing market is waiting with it. A lot of buyers and sellers have taken their hands off the wheel until the inflation and tariff questions answer themselves.
That waiting creates room. When most people sit still, the ones who do move face less competition and get more negotiating space. What I would not do is build a plan around a rate cut arriving in 2026. Plan around the mortgage you can actually get approved for today, and treat any cut in 2027 as a bonus rather than a budget line.
If you want to talk through what the June 2026 rate means for your own purchase or sale in Toronto, fill out the form at the bottom of this page or book a free consultation with me. Stay well and take care.
Frequently asked questions
What is the Bank of Canada policy rate as of June 2026?
The Bank of Canada held its policy rate at 2.25% at its June 10, 2026 meeting. It was the fifth consecutive decision without a change.
Why did the Bank of Canada not cut rates in June 2026?
Canada's economy contracted slightly in the first quarter of 2026, which would argue for a cut, but inflation was serious at the time, driven mainly by higher oil and gasoline prices. The Bank held at 2.25% rather than pick a side between the two problems.
When could Canadian interest rates come down again?
Speaking in June 2026, Moe Asgarian expected the rate to stay at 2.25% through the end of 2026. Cheaper oil, or a failure to reach a Canada and United States tariff agreement, could open the door to cuts in early 2027, possibly a little sooner.