BoC Holds Rates at 2.75%, Signals Possible Rate Cuts Later in 2025

BoC Keeps Policy Rate Unchanged

The Bank of Canada (BoC) has maintained its key policy rate at 2.75%, with the deposit rate at 2.70% and the Bank Rate at 3.00%. This marks the third consecutive hold since March 2025.

Governor Tiff Macklem confirmed that, while inflation remains under control, the central bank retains an “easing bias”—meaning rate cuts may be on the horizon if economic conditions weaken further .

Canadian Yield Curve & Bond Market Moves

• 3-month T-bill yield is at 2.68%, showing steady decline from a year ago
• 6-month T-bill yield rose slightly to 2.71% on July 29, 2025

These numbers suggest that markets are gradually shifting toward expectations of slower growth and potential rate cuts later in the year.

Economic Context & Key Risks

Canada’s economy showed mild weakness in May with a –0.1% GDP decline, although June estimates suggest a flat growth—avoiding a full quarterly contraction .

However, escalating trade tensions—especially with the U.S.—and mounting uncertainty have clouded the medium-term outlook. BoC officials are closely evaluating multiple economic scenarios rather than relying on singular forecasts .

What Mortgage Borrowers Should Know

If you’re planning to lock in a rate, right now is still reasonable—but staying flexible could pay off later this year.

The BoC is currently holding rates steady. Though inflation trends remain manageable, economic headwinds could lead to one or more rate cuts later in 2025. Bond yields are stable but under pressure—suggesting a cautious outlook from fixed-income markets.

For mortgage holders, this means moderate short-term stability—but the potential for savings through refinancing or renewal in coming months is growing.