As of July 10, 2025, the economic forecast from RBC just added a surprising twist to Canada’s rate outlook: no more rate cuts for the rest of the year.
In its latest monthly rate commentary, RBC’s economists say they now believe the Bank of Canada’s policy rate has already reached its floor. That’s a sharp pivot from earlier predictions — even from their own team — that expected one or two more 25-basis-point trims before year-end.

What exactly is RBC saying?

In plain terms: don’t count on lower borrowing costs anytime soon.
RBC’s new projection pegs the BoC’s overnight rate holding steady at 4.50% through the rest of 2025, and gradually softening to around 2.75% by mid-2026. This puts them at the most hawkish end of the Big Six bank forecasts.
For context:

BMO expects the rate to fall to 2.00% by early 2026
TD and CIBC are predicting 2.25%
Scotiabank sees a drop to 2.25%, but with more near-term movement
National Bank also maintains a more dovish outlook

So why the change of heart at RBC?
Their economists cite “stickier than expected inflation” and resilient economic data, which together signal less urgency for additional stimulus. That sentiment mirrors similar tones from the Federal Reserve in the U.S., which is also holding back on aggressive cuts despite cooling inflation.

What this means if you’re house-hunting or renewing soon

For borrowers, this shift in tone matters. Here’s why:
If you’re holding out for a rate drop before making a move, RBC’s new call suggests that waiting may not pay off in the short term. With inflation stabilizing but not reversing dramatically, the BoC is under less pressure to ease further.
If you’re up for renewal, you might want to explore locking in a shorter-term fixed mortgage — something like a 1- or 3-year fixed — giving you flexibility without betting on deep cuts that may never arrive.
And for those currently in variable-rate mortgages, this might be a neutral-to-negative signal. Rates may not rise again, but without further cuts, your payments likely won’t come down either.

📈 BoC Rate Forecast – Big Six Banks (2025–2026)

RBC: 4.50% → 2.75% by 2026
BMO: 4.50% → 2.00%
TD/CIBC: 4.50% → 2.25%
Scotiabank: 4.50% → 2.25%

What could still change the game?

While RBC’s take is firm for now, markets remain incredibly sensitive to new data. If the next CPI report (due later this month) shows a bigger drop in core inflation, markets could start pricing in another rate cut quickly.
Additionally, global headwinds — like U.S. recession signals or tariff disruptions — could pull bond yields lower and bring fixed mortgage rates down, even if the BoC doesn’t act right away.
For now, the key message is clear: don’t plan your next home move based on the hope of falling rates. Instead, assess where things stand now — and decide whether a stable, predictable payment structure might serve you better in today’s climate.

“In fact, RBC has already made targeted rate adjustments for select clients, perhaps as a preemptive move ahead of broader shifts.”

What This Means for You

Canada’s mortgage environment in 2025 continues to be shaped more by cautious optimism than dramatic relief. RBC’s updated forecast may feel like cold water for rate-cut hopefuls, but it could be the nudge many Canadians need to make decisions based on today’s reality, not tomorrow’s hope.

“If RBC believes rates won’t fall much further, now could be a good time to compare their latest 5-year fixed offering against TD’s.”