Bank of Canada Interest Rate 2025

Bank of Canada Overnight Rate (as of March 2025)

2.75%

Prime Rate: 4.95% | Last Change: March 12, 2025 (−0.25%)

Peak (2023)

5.00%

Low (2020–2022)

0.25%

Total Cuts (2024–25)

−2.25%

Prime Rate

4.95%

Bank of Canada Rate History 2022–2025

The fastest rate hiking cycle in modern Canadian history, followed by an aggressive easing cycle.

Date	Rate Decision	New Rate	Change
March 12, 2025	Rate cut	2.75%	−0.25%
January 29, 2025	Rate cut	3.00%	−0.25%
December 11, 2024	Rate cut	3.25%	−0.50%
October 23, 2024	Rate cut	3.75%	−0.50%
September 4, 2024	Rate cut	4.25%	−0.25%
July 24, 2024	Rate cut	4.50%	−0.25%
June 5, 2024	Rate cut (first)	4.75%	−0.25%
July 12, 2023	Rate hike	5.00%	+0.25%
June 7, 2023	Rate hike	4.75%	+0.25%
January 25, 2023	Rate hike (last of cycle)	4.50%	+0.25%
March 2, 2022	Rate hike (first of cycle)	0.50%	+0.25%
March 27, 2020	Emergency cut	0.25%	−0.50%

How the BoC Rate Affects Your Finances

Variable Rate Mortgages

Variable mortgage rates are directly tied to the prime rate (BoC rate + 2.2%). Every 0.25% BoC cut reduces your variable rate by 0.25%. On a $500,000 mortgage, a 1% rate cut saves approximately $417/month.

Fixed Rate Mortgages

Fixed rates are tied to Government of Canada bond yields, not the BoC rate directly. However, BoC rate expectations influence bond yields. Rate cuts often (but not always) lead to lower fixed mortgage rates over 3–6 months.

HELOCs

HELOC rates are always variable and move exactly with the prime rate. Every BoC cut immediately reduces your HELOC interest cost. On a $100,000 HELOC balance, a 1% cut saves $83/month.

Savings Accounts

High-interest savings account rates generally track the BoC rate. As rates fell from 5% to 2.75%, savings rates at digital banks dropped from ~4.5% to ~3%. This is why KOHO's 3% rate is worth locking in now.

GICs

GIC rates fell sharply from the 2023 peaks of 5–5.5% to current 3–4% range. 1–2 year terms currently offer the best value. Longer terms lock in rates if you believe cuts will continue.

Canadian Dollar

Rate cuts typically weaken the CAD vs. the USD. A weaker CAD makes Canadian exports more competitive but increases the cost of imported goods and cross-border purchases. The CAD/USD rate is influenced by the spread between Canadian and US rates.

Frequently Asked Questions

What is the Bank of Canada interest rate as of 2025?

As of March 2025, the Bank of Canada overnight rate is 2.75%, down from its peak of 5.00% in July 2023. The BoC has cut rates seven times since June 2024, reducing the overnight rate by a total of 2.25 percentage points. The corresponding prime rate is 4.95% (overnight rate + 2.2%). Future decisions are made approximately every 6–8 weeks. The BoC's next scheduled announcement dates are available at bankofcanada.ca.

What is the difference between the Bank of Canada rate and the prime rate?

The Bank of Canada overnight rate is the policy rate set by the BoC — the rate at which major financial institutions borrow from each other overnight. The prime rate is the benchmark used by banks for variable-rate lending. Canadian banks typically set their prime rate at BoC overnight rate + 2.20%. So when the BoC rate is 2.75%, prime is 4.95%. Variable mortgages and HELOCs are quoted as "prime minus X%" — so a mortgage at prime − 0.8% = 4.15% when prime is 4.95%.

Will the Bank of Canada cut rates further in 2025?

Market forecasts as of early 2025 suggest the BoC may have 1–3 additional cuts remaining, potentially bringing the overnight rate to 2.25–2.50% by end of 2025 — though trade uncertainty related to US tariffs on Canadian goods adds complexity. The BoC balances inflation (target: 2%) against economic growth. With inflation near target and growth sluggish, the bias remains toward further modest cuts. However, forecasts are inherently uncertain — consult a mortgage broker for advice on locking in versus staying variable.

Should I get a fixed or variable mortgage when the BoC is cutting rates?

In a rate-cutting environment, variable rates tend to benefit more in the short term as each cut immediately reduces your payment. However, if the market has already "priced in" expected cuts, fixed rates may already reflect anticipated future declines. The key question is: how many more cuts does the market expect, and are they already embedded in fixed rates? Your risk tolerance also matters — variable requires comfort with payment fluctuation. Always consult a licensed mortgage broker for personalized analysis.

How often does the Bank of Canada announce rate decisions?

The Bank of Canada has eight scheduled interest rate announcement dates per year, approximately every 6–8 weeks. These are published on the BoC website at the start of each year. In addition to the rate decision, the BoC publishes a Monetary Policy Report (MPR) four times per year with detailed economic forecasts. Unscheduled emergency decisions (like the three emergency cuts in March 2020) are rare and reserved for acute economic crises.

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