Latest bank decision: At its meeting on 28 January, the Bank of Canada held the target for the overnight rate...
Target for the Overnight Rate in Canada
Over the last decade, Canada's central bank policy rates experienced cycles of reduction and increase. The rates were lowered to near-zero during the COVID-19 pandemic to support the economy. As the economy began recovering, the central bank increased rates to manage inflationary pressures. From 2024, a rate cut cycle began in response to declining inflation, rising unemployment and mild economic growth.
The target for the overnight rate ended 2024 at 3.25%, compared to the end-2023 value of 5.00% and the figure a decade earlier of 1.00%. It averaged 1.77% over the last decade. For more interest rate information, visit our dedicated page.
Canada Interest Rate Chart
Note: This chart displays Policy Interest Rate (%) for Canada from 2014 to 2025.
Source: Macrobond.
Canada Interest Rate Data
| 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|
| Target for the Overnight Rate (%, eop) | 0.25 | 0.25 | 4.25 | 5.00 | 3.25 |
| 3-Month T-Bill (%, eop) | 0.06 | 0.16 | 4.23 | 5.04 | 3.16 |
| 10-Year Bond Yield (%, eop) | 0.71 | 1.49 | 3.30 | 3.11 | 3.23 |
Bank of Canada holds rates in January
Latest bank decision: At its meeting on 28 January, the Bank of Canada held the target for the overnight rate at 2.25%, following 100 basis points of cuts last year.
Recovering economy allows for wait-and-see approach: The Bank likely wanted to judge the effect of the 275 basis points of interest rate cuts since mid-2024 before countenancing any further rate changes. A combination of inflation within the Bank’s 1.0–3.0% target range and a recent recovery in employment gave the Bank the leeway to stay put.
Monetary policy likely to be unchanged ahead: Our Consensus is for rates to stay on hold from now to end-2026, though a few panelists see cuts and a few see hikes. Much will likely depend on future changes in U.S. trade policy and their impact on Canadian GDP and inflation.
Panelist insight: On the outlook, TD Economics’ Andrew Hencic said: “The Bank emphasized the data dependent approach in the coming months as the CUSMA review and geopolitical events could shift the outlook in 2026. That said, our baseline outlook is relatively in line with the BoC – below-trend growth helping inflation continue to moderate. Under these conditions we expect the BoC to stay on the sidelines in the coming months.” Desjardins economists concurred: “All told, the Bank looks to have done its best to change as little as possible to support the case for keeping interest rates on hold. And barring any unforeseen changes to the economic outlook, we expect the Bank to remain on the sidelines for the foreseeable future.”
Consensus Forecasts and Projections for the next ten years
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Canadian interest rate projections for the next ten years from a panel of 21 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Canadian interest rate.
Download one of our sample reports to visualize what a Consensus Forecast is and see our Canadian interest rate projections.
Want to get access to the full dataset of Canadian interest rate forecasts? Send an email to info@focus-economics.com.
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