On December 10, 2025, the Bank of Canada held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.
Bank of Canada policy rate in 2025, %
What the Bank said
- GDP grew a “surprisingly strong” 2.6% in the third quarter, though final domestic demand was flat.
- Employment rose solidly over three months, and unemployment fell to 6.5% in November.
- CPI inflation slowed to 2.2% in October; underlying inflation is around 2.5%.
- The Bank still sees the current rate at “about the right level” if the economy follows its October projection.
2025 in review
The Bank cut four times in 2025, in January, March, September and October, taking the rate from 3.25% at the end of 2024 to 2.25%. It held the rate at the other four meetings.
What it means for Calgary
Borrowing costs enter 2026 much lower than a year ago, while Calgary buyers have more homes to choose from than at any point in recent years. With the Bank signalling a pause, buyers can plan around today’s rates rather than waiting for further cuts. The next decision is on January 28, 2026.
Compared with October
In October, the Bank cut to 2.25% and said the rate was about the right level if the economy followed its projection. Since then, the data have been better than expected. GDP grew 2.6% in the third quarter after contracting 1.6% in the second, although the increase largely reflected volatility in trade and final domestic demand was flat. Employment has shown solid gains for three months, and unemployment fell from 7.1% in September to 6.5% in November. CPI inflation eased from 2.4% in September to 2.2% in October as gasoline prices fell and food prices rose more slowly.
Canadian unemployment rate, %
What the Bank expects
The Bank expects final domestic demand to grow in the fourth quarter, but GDP will likely be weak because of an expected decline in net exports. Growth should pick up in 2026, though large swings in trade may keep quarterly numbers volatile. In the near term, CPI inflation is likely to be higher because of the effects of last year’s GST/HST holiday on some prices. Looking through that, the Bank expects ongoing economic slack to roughly offset higher costs from the reconfiguration of trade and keep inflation close to 2%. Core inflation measures remain in the 2.5% to 3% range.
Abroad
The Bank said major economies continue to show resilience to US trade protectionism, though uncertainty is still high. Growth in the euro area has been stronger than expected, while soft domestic demand in China, including more weakness in its housing market, is weighing on growth. Oil prices and the Canadian dollar are roughly unchanged since October.
What it means for Calgary buyers and sellers
Rates are likely to stay where they are for now, so buyers and owners can plan on today’s mortgage costs. In Calgary, November inventory of 5,581 was 28% higher than a year ago, so buyers enter 2026 with lower rates than a year ago and more choice. Sellers should not count on further cuts to lift demand in the spring.
Local angle
A stronger national job market is good news for Calgary demand. The next decision is on January 28, 2026, with a new Monetary Policy Report.
2025 in numbers
Over the year, the Bank cut four times, in January, March, September and October, taking the rate from 3.25% at the end of 2024 to 2.25%, and held at its other four decisions. For a borrower with a variable-rate mortgage, that is a full percentage point lower than a year ago. CPI inflation has been close to the 2% target for more than a year.
