Latest bank decision: At its meeting on 8 October, the Central Bank decided to cut the Official Cash Rate (OCR)...
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 2025 to 2018.
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 cuts rates in September
Latest bank decision: At its meeting on 17 September, the Bank of Canada reduced the target for the overnight rate from 2.75% to 2.50%, following 225 basis points of rate cuts from mid-2024 to March 2025.
Weak economy and mild inflation drive move: The decision to ease monetary policy was driven on one hand by muted economic activity: GDP shrank in Q2, and employment fell for the second straight month in August. In addition, inflation has been well within the Bank’s 1.0–3.0% target range in recent months.
Rate cuts likely to continue: Most panelists see a further 25 basis-point cut later this year, though several don’t see rates falling any further from their current level.
Panelist insight: On the near-term outlook, Desjardins’ Randall Bartlett said: “While the Bank worries about supply chain issues resulting from the trade war, it also notes the potential for a weaker job market to stifle domestic demand. The uncertain fate of the Canada-U.S. trade agreement ahead of its review, will likely limit prospects for a near-term investment rebound. As such, we remain of the view that the Bank will cut again in October.”
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 20 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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