Today, the Bank of Canada held its overnight rate at 2.25% for the second consecutive decision in 2026. No surprise — markets had priced in a hold at over 92% odds heading into the announcement — but the backdrop is anything but boring.
The World Got Complicated Fast
Three months ago, the story was simple: 2026 was supposed to be a stable, predictable rate environment. That's no longer true.
Canada is now balancing a surprise spike in unemployment, weak economic growth, and fresh inflation risk from a global oil price shock driven by conflict in the Middle East. Iran's actions in the Persian Gulf sent oil prices sharply higher, with Brent crude briefly topping US$100/barrel. That kind of supply shock creates a real headache for a central bank trying to keep inflation near its 2% target.
TD Economist Maria Solovieva summed up the bind well: risks to growth are tilted to the downside, while inflation risks have gone up due to higher energy prices.
What Economists Are Actually Saying
The big banks are largely aligned: Oxford Economics, CIBC, RBC, BMO, and TD all project the Bank of Canada's policy rate will hold at 2.25% through the end of 2026 — though some, including Scotiabank, have started pencilling in hikes toward year-end if inflation doesn't cooperate.
Desjardins deputy chief economist Randall Bartlett put it plainly — the economy was weak but not weak enough to force the Bank's hand in either direction, and the oil price shock, if temporary, will likely be looked through.
That said, a hike is no longer off the table. Markets are now pricing in a rate increase before year-end, something that was essentially impossible to imagine three months ago.
What This Means for Your Mortgage
If you have a variable-rate mortgage, nothing changes today. Your payments stay the same. But understand the environment you're sitting in — the next move could be up, not down.
If you're coming up for renewal, this is not the moment to drift. Around 33% of Canadian mortgage holders are expected to face higher monthly payments by the end of 2026, with fixed-rate borrowers renewing this year seeing payment increases averaging around 20% as pandemic-era low rates expire.
If you're shopping for a fixed rate, watch bond yields more than the Bank of Canada. Bond yields have already moved higher because of the Iran conflict — fixed mortgage rates can rise even when the overnight rate sits still.
The Bottom Line
The rate held. The uncertainty didn't. Whether you're buying, renewing, or refinancing, the window to get clarity on your mortgage strategy is now — before the next announcement on April 29th, which lands alongside the Bank's full Monetary Policy Report.
If you want to run through your options, I'm here. Reach out, and let's make sure your mortgage is working for you in whatever environment comes next.