The Bank of Canada Held Its Rate: What That Means for You

The Bank of Canada left interest rates unchanged at its final meeting of 2025. Holding the policy rate at 2.25% carries a few meanings. I'm Moe Asgarian, principal real estate broker in Toronto and ranked #47 worldwide at RE/MAX. Let me walk through what a rate hold does to the loans you already carry, and give you a quick read on where the Canadian economy sits today.

I have spent years working specifically in buying, selling, and renting homes, and here I talk about the Toronto and GTA housing market. Let's get into it.

The Bank Held at 2.25%

My first point: at least in the early months of 2026, I would not expect more rate cuts. The reason is the Canadian job market. New labour reports came out, and employment grew for the third month in a row. That is why a lot of analysts predicted the Bank of Canada would not touch rates at its last meeting of the year, and that is exactly what happened. Job growth is one of the big factors the central bank weighs when it decides on rates.

Inflation and a Healthier Economy Than We Thought

Alongside employment, the Bank keeps one eye on inflation. In October the inflation rate sat at 2.2%. The governor of the Bank of Canada said rates are roughly at the right level to protect the economy through the current trade war with the United States. Put the pieces together: a positive move in the job market, decent growth numbers, and inflation that has not run too hot. That is why the Bank held the base rate and gave itself more room to think about its next move.

There is more. Statistics Canada has been revising its numbers, and it corrected economic growth for 2022, 2023, and 2024. Things were better than we thought. Canada's economy going into the tariff fight was healthier than we had believed, which is part of why the market is feeling more hopeful. Strong data like that is what helps Canada dodge a possible recession this year, the kind that the US tariff war and high inflation could have triggered.

Canada Still Faces Real Risks

Not everything is rosy, though. Canada still carries some risk, and the economy needs to be watched closely. One open question is whether the trade agreement between the US, Canada, and Mexico gets renewed. Another reality is that incomes here have not kept pace with inflation. Food, goods, and services are expensive. And keep in mind, if prices suddenly dropped, that would be a sign of recession too. What we want to see is Canadian productivity rise, so we can make goods and services at home at the same cost. That is what makes Canadians stronger.

What a Rate Hold Means for Borrowers

So what does a steady rate mean if you are the one carrying a loan? I think it was a good outcome. The Bank had brought rates down, and then we saw encouraging signs in the economy. A lot of people were waiting to see how far the swings would go, and now the picture is much clearer. To me it feels like we reached some stability heading into year end. Yes, loan rates are still high and buying a home is still not affordable. But knowing the base rate is not about to climb gives everyone a bit of calm.

My Forecast for 2026

Here is my call. In the first three months of 2026, the chance of a rate change and a cut is very low. From the fourth month on, I would allow for the possibility of one rate cut. What is completely clear is that the Bank itself is not certain about 2026. Honestly, nobody knows exactly which way things go. We are here checking the economy, the data, the trends, and the reports month by month, and I think we all should keep a rough picture of the future while checking the economy constantly. Canada is going through a new era, which means our decisions have to account for different scenarios. My overall read: the tariff threat is real, but the Canadian economy is in a better and more stable spot than it was.

If you are trying to figure out what all this means for your own mortgage or your next move, fill out the form at the bottom of this page or book a free consultation, and we'll talk it through. Stay well and take care.