Canada’s major banks are no longer aligned on where interest rates are headed, but that’s not necessarily bad news for homebuyers.
While most banks still anticipate more rate cuts from the Bank of Canada (BoC), RBC now believes the overnight rate may have already reached its floor, forecasting it will hold steady at 2.75% through 2026. This makes RBC’s outlook the most cautious of the Big Six, while others still foresee more downward movement.
In its latest update, RBC pointed to easing trade uncertainty and a mixed inflation outlook as reasons the BoC may pause further action.
🔍 Inflation Update: Inflation rose slightly to 1.9% in June, up from 1.7% in May, but still remains below the BoC’s 2% target. That suggests inflation is under control and not putting pressure on rates to rise.
📉 Unemployment News: Canada’s unemployment rate dropped to 6.9%, down from 7%, showing strength in the job market and boosting confidence in the economy.
Meanwhile, other major banks are still expecting rate cuts ahead:
- Scotiabank projects the BoC’s key rate to fall to 2.50%
- BMO sees more room, forecasting a drop to 2.00% by early 2026
- TD, CIBC, and National Bank expect a final rate of 2.25%
Steve Huebl, “Mortgage Digest: RBC expects no further BoC rate cuts,” Canadian Mortgage Trends, July 9, 2025.
📉 Many economists still expect more rate cuts ahead. Out of 28 experts surveyed, 18 believe we’ll see another 0.25% cut in September, bringing the benchmark rate to 2.50%. Looking further out, most predict at least two cuts by the end of 2025, with some expecting up to three.
These predictions are tied to ongoing signs of economic weakness. After growing at a modest pace earlier this year, Canada’s GDP shrank by 0.1% in April and is estimated to have fallen by 0.5% in Q2. Nearly half of the surveyed economists expect a technical recession—meaning two straight quarters of decline—to happen this year.
đź’ˇ What does this mean for buyers?
While RBC sees rates holding steady, many other experts still expect more cuts. With inflation staying low and job numbers improving, the market continues to show signs of stability and opportunity.
📲 Thinking about buying or refinancing? Whether rates stay steady or shift again, our team is here to guide you with expert advice and personalized mortgage solutions that fit your life. Let’s talk about your next move.
