Bank of Canada Holds at 2.25% (July 15, 2026): What It Means for Your Mortgage

On July 15, 2026, the Bank of Canada held its target for the overnight rate at 2.25%. The Bank Rate stays at 2.5% and the deposit rate at 2.20%. This is the sixth consecutive decision with no change — the rate has sat at 2.25% since the cut on October 29, 2025.

The short answer

Nothing changed today, and for most mortgage holders that is the entire story: no change to the policy rate means no change to prime, which means variable-rate payments stay where they are. The more interesting part is why the Bank held while inflation is running at 3.2% — and what that says about the rest of 2026.

• Policy rate: 2.25% — unchanged (sixth hold in a row)
• Inflation: 3.2% in May, but 2.2% excluding gasoline
• Growth: 0.7% in 2026, projected 1.8% in 2027 and 2028
• Next decision: September 2, 2026

Why hold when inflation is 3.2%?

A 3.2% headline number would normally argue for higher rates. The Bank's read is that this spike is narrow rather than broad. In its own words, "CPI inflation rose further to 3.2% in May, mainly because of higher gasoline prices linked to the conflict in the Middle East."

Strip gasoline out and inflation was 2.2% — essentially at target — and the Bank's core measures stayed close to 2%. That distinction is the whole decision. A price shock arriving through the pump is not the same thing as underlying, self-sustaining inflation, and raising rates does very little about the price of oil. The Bank expects inflation to "stay elevated in June then ease gradually in the coming months, returning to the 2% target in early 2027."

The economy is picking back up

Alongside the decision the Bank published its quarterly Monetary Policy Report. Growth "looks to have resumed" after roughly a year of stalling: GDP grew 0.7% in 2026, with the second quarter estimated at 2.5%, and the Bank projects 1.8% in both 2027 and 2028.

That recovery is part of why the Bank is comfortable waiting. An economy that is regaining momentum does not need more stimulus, which makes further cuts harder to justify — while inflation sitting near target once you look past gasoline makes hikes hard to justify too. Hence the hold.

What this means if you have a variable-rate mortgage

Your rate moves with your lender's prime rate, and prime tracks the Bank's policy rate. The policy rate did not move, so prime does not move, and neither does your rate or payment. If you hold a variable, today is a non-event — which, after the last few years, is its own kind of good news.

The useful question is whether to stay variable. With the Bank explicitly balancing two-sided risk, the case for variable is no longer "cuts are obviously coming." See our fixed vs variable breakdown for how to think about that on your own file rather than on a forecast.

What this means if you have a fixed-rate mortgage

Here is the part that catches people out: the Bank does not set fixed mortgage rates. Fixed pricing follows Government of Canada bond yields, which move on inflation expectations and global conditions — they can drift up or down in a week when the policy rate has not moved at all.

So "the Bank held" does not mean "fixed rates are frozen." If you are shopping or renewing, check the live board rather than assuming today's decision settled anything: our current mortgage rates update from the live feed.

If you are renewing in the next year

Anyone renewing in 2026 is likely coming off a term set in a very different rate environment. The single most valuable thing today's hold gives you is time to plan against a known number rather than a moving one.

Three things worth doing now:

• Start early. Most lenders will hold a rate for up to 120 days before your maturity date. That is a free option — if rates fall you take the lower one, and if they rise you are protected.
• Do not auto-renew. The renewal letter from your bank is an opening offer, not a market rate.
• Run the actual numbers. Our renewal guide walks through what changes at renewal and what is negotiable.

The two risks the Bank is watching

Governor Macklem was direct about what could knock the projection off course: "The two biggest risks to the projection are still the conflict in the Middle East and our trade relationship with the United States."

He also flagged the risk that inflation does not glide back down: "There is risk that it gets stuck above the 2% target. If cost increases and their pass-through are larger than expected or the economy recovers faster than expected, inflationary pressures will increase."

Read that as genuinely two-sided. The Bank's guidance is that Governing Council "will continue to assess the strength of the Canadian economy and the outlook for inflation and is prepared to adjust monetary policy as needed" — deliberately non-committal in both directions. Anyone telling you confidently which way the next move goes is guessing.

What to watch before September 2

The next scheduled decision is September 2, 2026. Between now and then, the data that matters most:

• Gasoline prices. They drove the headline number up; if they ease, headline inflation follows them down. If they stay high and start feeding into other prices, the Bank's "stuck above 2%" risk becomes real.
• Core inflation. Currently near 2%. This is the measure that would actually force the Bank's hand.
• The growth data. A recovery running hotter than 1.8% would add to inflationary pressure.

For a longer view, our mortgage rate forecast tracks the schedule and the trend.

The bottom line

A sixth straight hold at 2.25% is the Bank saying the gasoline-driven spike to 3.2% is not the signal — 2.2% ex-gasoline and core near 2% is. Variable holders see no change today. Fixed shoppers should watch bond yields, not this announcement. And if you are renewing, the hold buys you planning time you should actually use.

If you want to know what today means for your specific file rather than for the average Canadian, talk to us — or ask Maya, any hour, in 50+ languages.

Sources: Bank of Canada interest rate announcement and Monetary Policy Report, July 15, 2026; Governor's opening statement, July 15, 2026; Bank of Canada policy rate decision, October 29, 2025. Rate levels are as published by the Bank of Canada on the date shown. This article is general information, not mortgage advice for your specific situation.