The Bank of Canada announced on July 15 that it is keeping its policy interest rate at 2.25%. This is the sixth consecutive rate announcement without a change, meaning the policy rate has been sitting in the same chair since October 2025 and apparently has no immediate plans to get up.

For Alberta homeowners, buyers and anyone approaching a mortgage renewal, the decision provides some short-term stability. However, it does not necessarily mean mortgage rates will remain exactly where they are.

Why did the Bank of Canada hold rates?

Canada’s economy has been weak, but the Bank believes conditions are beginning to improve. It estimates that economic growth picked up during the second quarter, while consumer spending, exports and business investment are showing signs of life.

The Bank now expects Canada’s economy to grow by only 0.7% in 2026, followed by growth of 1.8% in both 2027 and 2028. The labour market also remains soft, with unemployment sitting at 6.5% in June.

In other words, the economy is improving, but it is not exactly sprinting up the stairs.

What about inflation?

Headline inflation increased to 3.2% in May, largely because of higher gasoline prices associated with the conflict in the Middle East. Once gasoline is removed from the calculation, inflation was much closer to the Bank’s target at 2.2%, while core inflation remained near 2%.

That distinction is important. The Bank does not want to raise interest rates unnecessarily in response to a temporary jump in energy prices, particularly while other parts of the economy remain fragile. Capital Economics also believes the Bank is prepared to look through energy-driven inflation rather than automatically responding with higher rates.

The Bank currently expects inflation to remain elevated over the near term before gradually returning to approximately 2% in early 2027. Of course, that forecast depends heavily on oil prices and global events—two things that have never been especially good at following a tidy schedule.

What does this mean for Alberta?

The relationship between oil and Alberta’s economy creates a bit of a balancing act. Higher energy prices can support investment, employment and provincial revenues. The Bank specifically expects business investment to receive a near-term boost from the oil and gas sector.

At the same time, higher gasoline and transportation costs can increase inflation across Canada. If those costs begin spreading into a wider range of goods and services, the Bank may eventually need to consider raising rates.

For now, that does not appear to be its preferred direction.

What does the rate hold mean for mortgages?

Because the policy rate did not change, most lenders are unlikely to change their prime rates immediately. Borrowers with variable-rate mortgages or home equity lines of credit should therefore see no direct change resulting from this announcement.

Fixed mortgage rates work differently. They are influenced primarily by Government of Canada bond yields, which can move even when the Bank of Canada remains on hold. A rate hold is reassuring, but it does not freeze every mortgage rate in place.

Anyone buying a home, renewing or refinancing should still compare available options rather than waiting for a dramatic rate announcement. Sometimes the best mortgage decision is less about predicting the Bank of Canada and more about choosing the right term, lender and flexibility for your own plans.

Mortgage Broker Advice

The next Bank of Canada rate announcement is scheduled for September 2, 2026. If you have any questions or would like some free personalized advice, please contact me.