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The target for the overnight rate is the Bank of Canada's key policy tool — it drives prime rate and, indirectly, variable mortgage pricing across Canada.
Bank of Canada policy interest rate, July 2026
— down 2.75 points from the 5.00% peak reached in mid-2023.
Bank of Canada (series V39079)
Values are the target overnight rate as of the last business day of each year (mid-2026 for the current year).
Year-end values of the target for the overnight rate; 2026 reflects the most recent published rate as of late July. Source: Bank of Canada.
2023 marked the cycle peak: the policy rate reached 5.00% in mid-2023, the highest since 2001, after a long run of increases.
The 2020 pandemic cut was the deepest in over a decade: the Bank slashed the rate to 0.25% — its effective floor — within weeks of the COVID-19 shock.
2022 was the fastest tightening cycle in the modern inflation-targeting era: the rate rose 4.00 points in twelve months, from 0.25% to 4.25%.
The current easing cycle has trimmed 2.75 points since the peak: brokers should expect variable-rate and prime-linked products to keep tracking these moves closely.
| Year | Policy rate | Change | Note |
|---|---|---|---|
| 2015 | 0.50% | — | Post-oil-shock cuts |
| 2016 | 0.50% | 0.00 pts | Held |
| 2017 | 1.00% | +0.50 pts | Hikes resume |
| 2018 | 1.75% | +0.75 pts | Tightening continues |
| 2019 | 1.75% | 0.00 pts | Held |
| 2020 | 0.25% | -1.50 pts | Pandemic emergency cut |
| 2021 | 0.25% | 0.00 pts | Held at the effective floor |
| 2022 | 4.25% | +4.00 pts | Fastest tightening cycle on record |
| 2023 | 5.00% | +0.75 pts | PEAK — highest since 2001 |
| 2024 | 3.25% | -1.75 pts | Cutting cycle begins |
| 2025 | 2.25% | -1.00 pts | Cuts continue |
| 2026 | 2.25% | 0.00 pts | As of July 2026 — sixth consecutive hold |
Source: Bank of Canada, Valet series V39079 (target for the overnight rate). Values are year-end.
Chartered bank prime rate, July 2026
Bank of Canada
Peak policy rate, reached mid-2023
Bank of Canada
The single-year rise in the policy rate during 2022
Bank of Canada
Pandemic-era effective floor, 2020–2021
Bank of Canada
The policy rate is the single biggest driver of variable-rate and prime-linked mortgage pricing, and its direction shapes whether clients lean fixed or variable at renewal. Track it alongside bond yields (which drive fixed pricing) to have a credible answer ready before a client asks “should I lock in?”
Last updated August 1, 2026. Each figure carries its source; projections are labelled. Page reviewed on every major source release. Information only — not advice.
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