Canada Prime Rates

Following the Bank of Canada's decision to hold its policy rate steady at 2.75%, the prime lending rate remains unchanged at 4.95%.

Core inflation continues to exceed the Bank of Canada's 2% target, signalling persistent underlying inflationary pressures. However, recent declines in oil prices and the elimination of the consumer carbon tax are helping to moderate headline inflation. Meanwhile, both the Canadian and global economies are showing resilience despite ongoing disruptions from the U.S. trade war.

Bank of Canada Maintains Policy Rate Amid Trade Tensions

• Canada faces significant trade tensions with its largest trading partner, creating economic uncertainty and export disruptions that pose risks to the Canadian economy.
• The impact varies across sectors, with some industries confronting new tariffs while others have secured USMCA compliance certification and avoid tariffs.
• The economic effects are complex: U.S. tariffs exert a marginally disinflationary impact on Canada, while Canada's retaliatory measures contribute to inflationary pressures.
• Reduced trade activity, weakening business confidence, and potential employment impacts further constrain economic growth, making Canada's economic outlook more challenging.
• The overall reduction in economic activity from these trade tensions is expected to dampen demand throughout the economy, creating broader disinflationary pressure.

The Bank of Canada is carefully assessing the magnitude and timing of inflationary and disinflationary forces stemming from U.S. trade policies. Based on current tariffs and countermeasures, the Bank expects these effects to largely offset each other, justifying its decision to hold the policy rate steady for now.

The Prime rate in Canada is currently 4.95%. The Prime rate is the interest rate that banks and lenders use to determine the interest rates for many types of loans and lines of credit. These can include credit cards, HELOCs, variable-rate mortgages, car and auto loans, and much more. If you have any of these loans, changes in the prime rate will also change your debt payments and thus your GDS and TDS ratios.