This morning, on October 29, 2025, the Bank of Canada lowered its target for the overnight rate to 2.25%, a 25-basis-point reduction.
Weak economic conditions and the outlook for inflation close to the 2% target explain the Governing Council’s decision, which considers the current rate appropriate to support the economy during this period of structural adjustment.
The Canadian economy is adjusting to significant U.S. tariffs affecting several sectors and is adapting to elevated uncertainty. These tariffs have led to a decline in demand for Canadian goods, weighing on the overall economy. The reorganization of global trade and domestic production is also contributing to higher costs.
The next policy rate announcement will take place on December 10, 2025. We will continue to monitor developments closely.
Implications
The Bank of Canada’s target for the overnight rate determines the prime rate set by major financial institutions, which is the benchmark used to price variable-rate mortgage loans. Therefore, today’s announcement is not expected to change the rates currently offered on variable-rate mortgages.
However, the Bank of Canada’s policy rate does not directly determine fixed mortgage rates.
Why use a mortgage broker?
In a context where Bank of Canada decisions are increasingly difficult to anticipate, it is all the more important to rely on an expert. A mortgage broker can help you understand the impact of changes in the policy rate on your financing strategy and guide you toward an option that suits your situation, whether you are purchasing a home, renewing your mortgage, or refinancing.