Canada Prime Rates

The Prime Rate remains at 4.95% following the Bank of Canada's decision to hold its policy rate steady at 2.75%.

Over the past two months, headline inflation has exceeded the Bank of Canada's (BoC) 2% target. However, recent declines in oil prices coupled with the elimination of the consumer carbon tax are expected to exert downward pressure on inflation in the coming months. Nevertheless, the Canadian economy currently faces unprecedented uncertainty due to rapidly evolving U.S. trade policies, which continue to shift on an almost daily basis.

Bank of Canada Maintains Policy Rate Amid Trade Tensions

• Canada is confronting an unprovoked trade war with its largest trading partner, creating economic uncertainty and export disruptions that threaten to push the Canadian economy into recession.
• The impact varies across sectors, with some industries facing steep tariffs while others rush to secure USMCA compliance certification to avoid similar penalties.
• The economic effects are complex: U.S. tariffs have a marginally disinflationary impact on Canada, while Canada's retaliatory tariffs are significantly inflationary.
• Diminished trade activity, deteriorating business confidence, and potential job losses further constrain economic growth, making Canada's economic outlook increasingly precarious.
• The overall reduction in economic activity resulting from this trade conflict is expected to suppress demand throughout the economy, creating broader deflationary pressure.

The Bank of Canada is diligently analyzing both the magnitude and timeline of inflationary and disinflationary pressures caused by U.S. trade policies before considering any change to its policy rate.

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.