Another hold?
On June 4, the Bank of Canada kept its policy interest rate steady at 2.75%.
And while that might sound like “nothing happened,” this decision carries strong signals.
At a time when many Canadians are hoping for relief, a rate cut seemed possible. Inflation has come down, economic growth is slowing… so why didn’t the Bank lower the rate?
Because the decision isn’t just about what has happened—but about what could happen.
The Bank is assessing not only current inflation, but the risk of it rising again if they act too quickly. They’re trying to balance that risk. A premature cut could spark another cycle of volatility.
So a rate hold is also a message. One of caution, of patience… and of waiting.
But also, a sign that the cutting cycle hasn’t officially begun.
First things first: What is the Bank of Canada’s interest rate—and why does it matter?
The Bank’s policy rate is like the “base price” of money. It influences everything—from mortgages and personal loans to lines of credit and credit cards.
When the rate goes up:
- Borrowing becomes more expensive
- Monthly payments increase (especially for variable-rate mortgages)
- Consumers and businesses tend to spend less
- This helps cool the economy and reduce inflation
When the rate goes down:
- Borrowing becomes cheaper
- Monthly payments drop
- The economy gets a boost… but there’s also more risk of price pressure
So, when the Bank decides to hold steady, they’re essentially saying: “No more braking… but no more acceleration either.”
Why didn’t they cut the rate this time?
The Bank explained that while overall inflation dropped to 1.7%, core inflation (which excludes volatile items like gas and food) remains around 2.3%. That means price pressure isn’t fully gone.
Also:
- Canada’s economy grew more than expected in Q1
- New U.S. tariffs are adding uncertainty to Canadian exports
- The labour market shows mixed signals: unemployment is rising, but wage growth is still firm
In short: there are reasons to cut—but also reasons to wait.
What this decision does not mean
Many people see a rate hold and think they should wait to act. But assuming “nothing will change” is a mistake.
Let’s clarify a few common misconceptions:
- It doesn’t mean rates won’t go down later this year—just that they haven’t yet
- It doesn’t mean you should delay buying or refinancing—waiting could cost you more in the long run
- It doesn’t mean you’re stuck—many borrowers can still improve their current situation by renegotiating or adjusting their strategy
How does this affect you if you already have a mortgage?
If you have a fixed rate:
Your payments haven’t changed. The good news? Fixed rates are slowly trending down. If you’re renewing soon, you may secure a better deal than you would have earlier this year.
If you have a variable rate:
Your payment is likely the same as last month—but still higher than when you first signed. If it’s straining your budget, now’s a good time to explore options: switching products, making extra payments, or consolidating.
Thinking of buying a home?
This rate pause could be good news. It’s not the cut many hoped for, but it gives you time to prepare—without the urgency that rate hikes bring.
You can:
- Review your pre-approval
- Recalculate your affordability based on current rates
- Take advantage of incentives or builder promotions
- Run scenarios with a professional who can guide you
Waiting for the “perfect rate” might cost you more than you think.
The goal isn’t to wait for ideal conditions—it’s to move forward with clarity and information.
Final thought
A rate hold isn’t a sign to stay still.
It’s an active pause. A chance to reflect, plan, and act with purpose.
At UCC Mortgage Co., we believe financial knowledge shouldn’t be reserved for experts or institutions—it belongs in your hands, so you can build a future with confidence and clarity.
If your renewal is coming up, if you’re exploring the market, or if you’re unsure what to do with your current mortgage—let’s talk.
Schedule a call with our team. Because in today’s market, information is your best interest rate.
