Explore the latest forecasts for the Bank of Canada’s policy rate from the Big 6 banks. We’ve compiled these insights, including any changes from previous forecasts, to help you stay informed about interest rate trends and their potential impact.
Forecasts from the country’s Big 6 banks are split on how much the Bank of Canada will ease rates in 2025.
Scotiabank expects the Bank of Canada to hold rates steady at 2.75% through 2026.
Meanwhile, TD, RBC and CIBC anticipate two more quarter-point cuts before the end of 2025, bringing the policy rate down to 2.25%. BMO and National Bank project three more quarter-point cuts to bring the overnight rate down to 2.00%.
BoC policy rate forecasts from the Big 6 banks
| Current Policy Rate: | April decision | June decision | Q3 2025 | Q4 2025 | Q4 2026 | |
|---|---|---|---|---|---|---|
 | 2.75% | 2.50% | 2.25% | 2.00% | 2.00% | 2.00% |
 | 2.75% | 2.75% | 2.25% | 2.25% | 2.25% | 2.25% |
 | 2.75% | 2.75% | 2.50% | 2.25% | 2.00% | 2.50% |
 | 2.75% | 2.50% | 2.50% | 2.25% | 2.25% | 2.50% |
 | 2.75% | 2.75% | 2.75% | 2.75% | 2.75% | 2.75% |
 | 2.75% | 2.50% | 2.25% | 2.25% | 2.25% | 2.25% |
What these forecasts mean for Canadian borrowers
The Bank of Canada’s policy rate is directly tied to mortgage rates, so understanding these forecasts is essential for borrowers.
A lower policy rate typically leads to reduced borrowing costs, which can be a relief to those renewing fixed-rate mortgages or considering variable-rate loans.
How the Bank of Canada policy rate impacts variable rates and lines of credit
The Bank of Canada’s policy rate directly affects both variable-rate mortgages and Home Equity Lines of Credit (HELOCs), as these products are typically tied to the prime rate.
When the BoC changes its policy rate, the prime rate adjusts accordingly, which in turn affects the interest rates on both types of borrowing.
For borrowers with variable-rate mortgages or HELOCs, a reduction in the BoC’s policy rate leads to a lower prime rate, reducing borrowing costs. For instance, a 25-basis-point (bps) cut in the policy rate typically translates to a roughly $12.50 reduction in monthly payments for every $100,000 in mortgage debt on a 25-year amortization. While the exact savings depend on the loan balance, this decrease can offer significant relief to homeowners with larger debts.
However, if the BoC raises its policy rate, the prime rate increases, leading to higher payments for borrowers with variable rates or HELOCs. Understanding how these shifts work can help homeowners plan for upcoming changes and manage their finances accordingly.
In summary, when the Bank of Canada lowers its policy rate, both variable-rate mortgages and HELOCs become more affordable, reducing monthly payments and easing financial pressure. Conversely, rate hikes can increase borrowing costs, making it important for borrowers to stay informed about potential rate movements.
Last modified: April 14, 2025
