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Rates and pricing

Bank of Canada monetary policy

Français : Politique monétaire — Banque du Canada

Set of Bank of Canada decisions to achieve its 2% inflation target. The main tool is the policy rate, which influences all interest rates in the country.

Definition

The Bank of Canada conducts Canadian monetary policy with the primary mandate of maintaining inflation around 2% (target range: 1-3%). Its main tool is the policy rate (overnight rate target), adjusted at 8 annual announcements.

Transmission mechanism: 1. BoC raises or lowers the policy rate 2. Banks adjust their prime rate (policy rate + 2.20%) 3. Variable mortgage rates follow instantly 4. Fixed rates follow bond yields (indirect influence)

Non-conventional tools: during crises (2009, 2020), the BoC may resort to quantitative easing (bond purchases to lower long-term rates) or forward guidance (commitment to keep rates low).

Calendar 2025: 8 announcements (January, March, April, June, July, September, October, December).

Official sources

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This definition is provided for informational purposes only and does not constitute legal, tax, or financial advice. For a personal situation, consult an AMF-licensed mortgage broker, notary, accountant, or the relevant financial institution.