Canada’s housing market, mortgage rates, and borrowing costs are closely tied to decisions from the Bank of Canada. The central bank’s next interest rate announcement is scheduled for March 18, 2026, and economists are increasingly aligning on what they believe policymakers will do next.

After several years of volatility in interest rates, many analysts now expect the Bank of Canada to take a more cautious approach in the coming months.

Current Bank of Canada Policy Rate

As of early 2026, the Bank of Canada’s overnight policy rate sits at approximately 2.25% following earlier rate adjustments aimed at bringing inflation back toward the central bank’s 2% target.

The overnight rate influences borrowing costs across the economy, including:

• Variable mortgage rates
• Lines of credit
• Business loans
• Government bond yields

Because of this, each Bank of Canada decision can have a significant impact on housing markets and household finances across Canada.

Most Economists Expect the Bank of Canada to Hold Rates

Ahead of the March 18 announcement, the majority of economists expect the central bank to hold its policy rate steady rather than raise or cut rates.

Recent surveys of economists indicate that many analysts believe the Bank of Canada will remain cautious while monitoring key economic indicators.

Several factors are driving expectations of a pause:

• Inflation has moved closer to the Bank of Canada’s 2% target
• Economic growth remains moderate
• Global economic uncertainty remains elevated
• Policymakers want additional data before making another move

Because of these conditions, many economists believe the Bank will wait for clearer signals before adjusting policy.

Forecasts From Major Canadian Banks

Several major financial institutions have published forecasts outlining where they expect the policy rate to go next.

Selected forecasts include:

• RBC Economics: Policy rate likely to remain stable through much of 2026
• TD Economics: Interest rates could remain steady until 2027
• CIBC Economics: Gradual stabilization with no near-term changes
• BMO Capital Markets: Rate hold expected in the near term
• Desjardins: Possible rate increases later in 2026 if inflation rises
• Scotiabank: Some risk of rate hikes in the second half of 2026

These projections highlight that while a hold is widely expected for March, economists remain divided on the longer-term direction of rates.

What Could Change the Bank’s Decision

The Bank of Canada has emphasized that future decisions will remain data-dependent. Several economic indicators could influence whether rates remain stable or move later in the year.

Key indicators include:

• Inflation trends
• Labour market conditions
• GDP growth
• Global economic risks
• Housing market activity
• Trade developments with the United States

If inflation rises again or economic growth strengthens unexpectedly, the Bank could consider tightening policy again. Conversely, a weaker economy could push policymakers toward rate cuts later in the year.

What This Signals for Canada’s Housing Market

Interest rates remain one of the most important factors affecting Canada’s housing market.

If the Bank of Canada holds rates steady, it could provide more stability for:

• Mortgage borrowers
• Home buyers
• Real estate markets

However, uncertainty around inflation and global economic conditions means the outlook for interest rates in late 2026 remains less clear.

For now, economists broadly agree that the most likely outcome for the March 18 decision is no change to the policy rate.

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References

Bank of Canada. (2026). Interest rate announcements and monetary policy decisions. https://www.bankofcanada.ca

Reuters. (2026). Economists expect Bank of Canada to hold rates as inflation stabilizes. https://www.reuters.com

True North Mortgage. (2026). Canada mortgage and interest rate forecast. https://www.truenorthmortgage.ca/blog/mortgage-rate-forecast

CityNews Halifax. (2026). Bank of Canada says rate path uncertain amid economic risks. https://halifax.citynews.ca