{"id":27904,"date":"2026-06-15T11:11:41","date_gmt":"2026-06-15T18:11:41","guid":{"rendered":"https:\/\/www.roryc.ca\/blog\/?p=27904"},"modified":"2026-06-15T08:53:06","modified_gmt":"2026-06-15T15:53:06","slug":"why-the-bank-of-canada-kept-the-policy-rate-unchanged-at-2-25","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2026\/06\/why-the-bank-of-canada-kept-the-policy-rate-unchanged-at-2-25\/","title":{"rendered":"Why The Bank of Canada Kept The Policy Rate Unchanged at 2.25%?"},"content":{"rendered":"<p style=\"text-align: justify;\">Marking a continued period of stability, the Bank of Canada held its policy rate steady at 2.25% in its June announcement. By opting for another hold, the Bank is exercising strategic caution, balancing newly confirmed data on a technical recession against the threat of energy-driven inflation stemming from the war in Iran.<\/p>\n<p style=\"text-align: justify;\"><strong>What The Rate Hold Means for Borrowers?<\/strong><\/p>\n<p style=\"text-align: justify;\">On the surface, the case for rate cuts looks compelling. Canada\u2019s economy has now contracted for two consecutive quarters, meeting the technical definition of a recession. But the Bank of Canada is not ready to move.<\/p>\n<p style=\"text-align: justify;\">\u201cThat the Canadian economy has been newly minted as in a technical recession will do little to sway the Bank of Canada from its rate hold stance,\u201d says Penelope Graham, mortgage expert at Ratehub.ca. \u201cWhile the latest GDP numbers indicated the economy has contracted over the last two quarters, the headline number masks a mixed performance, and it\u2019s already anticipated that growth will resume in April; the Bank won\u2019t be rushing to ease interest rates while it awaits that result.\u201d<\/p>\n<p style=\"text-align: justify;\">The Iran conflict remains the central complicating factor. \u201cHowever, this sluggish growth highlights the challenges the Bank has grappled with over the last year: supporting Canadians who are already struggling with a higher cost of living, and growing inflation pressures due to the war in Iran,\u201d Graham adds. \u201cThe Bank has stated it\u2019s willing to \u2018look through\u2019 the impact of spiking oil prices, but this particular headwind hasn\u2019t yet resolved, and the threat of rate hikes will linger as long as the Strait of Hormuz remains closed.\u201d<\/p>\n<p style=\"text-align: justify;\">In its June report, the Parliamentary Budget Officer projects the Bank will maintain its current rate through 2026, then gradually raise it toward 2.75% in 2027. For borrowers, that means current borrowing costs are likely to remain elevated for an extended period, with the longer-term risk tilting toward higher rates rather than lower ones.<\/p>\n<p style=\"text-align: justify;\"><strong>What\u2019s Happening with Mortgage Rates?<\/strong><\/p>\n<p style=\"text-align: justify;\">Variable rates remain the most affordable option heading into summer. Five-year variable mortgage rates are currently in the mid-3% range, making them the lowest-cost choice available in Canada. That advantage should hold as long as the Bank maintains its current stance, though borrowers considering a variable rate should have the flexibility to absorb potential increases or a clear plan to convert if needed.<\/p>\n<p style=\"text-align: justify;\">Fixed rates, however, face more pressure. Five-year insured fixed mortgage rates are sitting just above 4%, but upward pressure remains. Rising bond yields, driven by global inflation uncertainty, are prompting Canadian lenders to reprice, with the five-year Government of Canada bond yield holding near 3%.<\/p>\n<p style=\"text-align: justify;\">For mortgage shoppers and those nearing renewal, Graham\u2019s advice is consistent: prioritize protection over prediction. Securing a pre-approval and rate hold can provide up to 120 days of rate security while borrowers compare their options, a meaningful buffer in a market where conditions can shift quickly.<\/p>\n<p style=\"text-align: justify;\"><strong>Canada\u2019s Real Estate Market is Cautiously Turning A Corner<\/strong><\/p>\n<p style=\"text-align: justify;\">A recent RBC monthly update report suggests Canada\u2019s housing market is stabilizing rather than rebounding sharply. Markets like Toronto and Hamilton are showing early signs of recovery, while previously strong regions in Saskatchewan, Manitoba, parts of Quebec, and Atlantic Canada appear to be peaking. Nationally, those opposing trends have largely balanced out: home sales in April came in essentially flat at approximately 426,900 units on a seasonally adjusted annualized basis, up just 0.7% from March, marking the third consecutive month of flat activity.<\/p>\n<p style=\"text-align: justify;\">Graham acknowledges the push and pull at play. \u201cWhile spring real estate data has shown demand is returning, economic anxiety continues to hold would-be buyers back \u2013 and a technical recession won\u2019t help ease those concerns, especially if the next labour market report indicates a downturn in jobs. However, there is a growing narrative that Canada\u2019s housing market may have hit its bottom in terms of affordability, and that mortgage rates are poised to rise,\u201d she explains.<\/p>\n<p style=\"text-align: justify;\"><strong>How Canadian Homeowners 45+ are Securing Their Financial Futures?<\/strong><\/p>\n<p style=\"text-align: justify;\">New survey findings from EQ Bank provide a useful window into how Canadian households are adapting to today\u2019s economic environment. In a national poll of homeowners aged 45 and older, 69% said they are cutting expenses due to retirement affordability concerns, while 68% of respondents aged 45-54 reported supporting family members while trying to secure their own financial future.<\/p>\n<p style=\"text-align: justify;\">Taken together, those numbers point to a cohort that is carefully managing cash flow, juggling intergenerational obligations, and making trade\u2011offs around spending and saving. For many, decisions about downsizing, using home equity, or helping adult children enter the market are being shaped not just by interest rates but by a broader mix of cost\u2011of\u2011living pressures, retirement timelines, and family needs.<\/p>\n<p style=\"text-align: justify;\"><strong>A Narrow Window for Prepared Buyers<\/strong><br \/>\nFor motivated buyers, this summer may represent a genuine window of opportunity. Stable borrowing costs, softer prices in select segments, and a less competitive landscape are creating openings, particularly for first-time and move-up buyers who are ready to act. Rather than waiting for lower rates, the focus should shift to preparation: tightening budgets, securing a rate hold, and staying flexible on what and where to buy.<\/p>\n<p><a href=\"https:\/\/www.zoocasa.com\/blog\/boc-rate-hold-june-2026\/\" target=\"_blank\" rel=\"noopener\">BoC Holds : Why A Technical Recession isn\u2019t Enough to Trigger A Rate Cut<\/a> by Angela Serednicki | zoocasa<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Marking a continued period of stability, the Bank of Canada held its policy rate steady at 2.25% in its June announcement. By opting for another hold, the Bank is exercising &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2026\/06\/why-the-bank-of-canada-kept-the-policy-rate-unchanged-at-2-25\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9,13],"tags":[],"class_list":["post-27904","post","type-post","status-publish","format-standard","hentry","category-mortgage","category-real-estate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.2 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Why The Bank of Canada Kept The Policy Rate Unchanged at 2.25%? &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2026\/06\/why-the-bank-of-canada-kept-the-policy-rate-unchanged-at-2-25\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Why The Bank of Canada Kept The Policy Rate Unchanged at 2.25%? &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Marking a continued period of stability, the Bank of Canada held its policy rate steady at 2.25% in its June announcement. 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