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 2024 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 keeps rates steady in July
Latest bank decision: At its meeting on 30 July, the Bank of Canada kept its target for the overnight rate at 2.75%, following 225 basis points of rate cuts from mid-2024 to March 2025.
External uncertainty underpins hold: The decision to keep monetary policy on hold was driven by a desire to assess the impact of past rate cuts, in a context of extremely elevated uncertainty surrounding the GDP and inflation outlooks due to the trade conflict with the U.S. Moreover, the Bank commented that the Canadian economy was so far proving resilient despite tariff uncertainty, and that underlying inflation pressures remain, providing further motivation to keep rates unchanged.
Rate cuts likely to resume: The Bank suggested that monetary easing could be necessary if a weakening economy puts downward pressure on inflation. Most panelists see more monetary easing this year, of between 25 and 75 basis points, though several panelists expect rates to remain unchanged through end-2025.
Panelist insight: On the outlook, TD Economics’ Andrew Hencic said: “Inflation will remain contained over the coming months, and the key will be the scale of any bounce-back in Q3 and Q4 growth. The resulting build-up in excess supply means there's still scope to reduce the overnight rate in the coming months. However, the BoC is unlikely to push below the bottom end of their neutral range (2.25%).” Desjardins’ LJ Valencia said: “Canadian policy makers are hesitant to cut rates considering lingering concerns about the effects of tariffs on consumer prices and the resilience in the economy. Reading between the lines, it does look like the Bank of Canada is teeing up a return to monetary easing later this year. We continue to see the Bank of Canada cutting rates three times this year, with the first 25 basis point cut coming at the next Bank of Canada fixed announcement date in September.”
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 22 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.
Latest Global Monetary Policy News
-
Peru: Central Bank of Peru cuts rates in September Central Bank reduces rates: At its September meeting, the Central Bank of Peru (BCRP) decided to cut the reference interest... -
Chile: Central Bank of Chile holds rates in September Latest bank decision: At its September meeting, the Central Bank of Chile held its monetary policy interest rate at 4.75%,... -
Malaysia: Bank Negara Malaysia leaves rates unchanged in September Central Bank back on hold: At its meeting on 4 September, the Bank Negara Malaysia (BNM) decided to maintain the... -
Poland: Central Bank cuts rates in September Rates fall to over three-year low: At its meeting on 2-3 September, the Central Bank decided to cut the NBP... -
Kazakhstan: National Bank of Kazakhstan leaves rates unchanged in August Bank meets expectations and keeps rates steady: At its meeting on 29 August, the National Bank of Kazakhstan (NBK) decided... -
Dominican Republic: Central Bank remains on hold in August Bank stands pat for eight time this year: At its meeting on 28 August, the Central Bank of the Dominican... -
Egypt: Central Bank of Egypt resumes loosening cycle aggressively in August CBE cuts rates by more than markets projected: At its meeting on 28 August, the Monetary Policy Committee of the...