Bank of Canada to Announce Final Interest Rate Update for 2025

The Bank of Canada (BoC) is poised to announce its final interest rate update of 2025 on December 10, 2025. Earlier this year, the central bank made significant adjustments, lowering the key interest rate by 0.25 percentage points in both September and October, bringing the rate down to 2.25 percent. These changes reflect the bank’s response to economic conditions and inflation trends.

Analysts suggest that the BoC may adopt a “holding pattern” for the remainder of the year. Penelope Graham, a mortgage expert from Ratehub.ca, noted that the Governing Council has signaled satisfaction with the current policy rate, asserting it adequately supports the economy while mitigating inflation. Graham stated, “Fiscal support will be needed to support affected industries, rather than lower interest rates alone.”

Despite the stronger-than-anticipated inflation figures for October, which hovered around 2.5 percent, Graham indicated that the Bank does not foresee immediate cuts. The upward pressure on inflation appears to be easing, and factors such as the removal of Canadian counter tariffs are expected to stabilize price growth.

Impact on the Housing Market and Mortgages

Graham also discussed the implications for the Canadian housing market, which has been recovering slowly. Although buyer demand has increased steadily over the past six months, home prices remain subdued, creating a favorable environment for buyers. “Plenty of available inventory has made for buyer-friendly conditions in most Canadian markets,” she explained.

In terms of mortgage rates, Graham expressed that a decrease in variable mortgage rates is unlikely in the near future. However, she pointed out that current variable rate pricing is the most competitive since 2022, with five-year terms available for as low as 3.45 percent. These conditions may help maintain buyer interest, despite ongoing economic uncertainties.

The upcoming interest rate announcement is critical, as it will provide insights into the BoC’s assessment of current economic challenges and future monetary policy. As the year concludes, many stakeholders in the housing market will be closely monitoring the central bank’s decisions and their potential impacts.