The Bank of Canada held its overnight rate at 2.25% on April 29, keeping borrowing costs steady as the country navigates a turbulent global backdrop shaped by the conflict in the Middle East and ongoing US trade policy uncertainty.
For Canadian real estate, the decision offers little relief in the near term. The Bank's April outlook paints a cautious picture for housing: activity declined in the fourth quarter of 2025 and remains constrained by slow population growth, economic uncertainty, and affordability challenges that have yet to meaningfully ease. GDP growth is projected at a modest 1.2% for 2026, rising gradually to 1.6% in 2027 and 1.7% in 2028 — a trajectory that suggests any meaningful recovery in housing demand is still some distance away.
On the inflation front, CPI hit 2.4% in March on the back of sharply higher gasoline prices, and the Bank expects that figure to climb to roughly 3% in April. Core inflation has been holding just above 2%, and the proportion of CPI basket items rising above 3% has actually declined in recent months — a modestly encouraging sign. The Bank says it's watching closely to ensure energy price increases don't feed more broadly into goods and services, and has signalled it won't let higher energy costs become persistent inflation. Based on the assumption that oil prices ease over the coming year, the Bank forecasts inflation returning to its 2% target in early 2027.
The labour market remains a drag. Employment growth has been subdued over the past year, with job losses concentrated in sectors hit by US tariffs. The unemployment rate is sitting in the 6.5–7% range — conditions that tend to dampen buyer confidence and purchasing power, and that make lenders cautious. Until that picture improves, a meaningful rebound in housing activity is a tough ask.
The Bank's Governing Council noted it is closely monitoring both the Middle East conflict and the economy's response to US trade pressures, and has left the door open to move rates in either direction as conditions evolve.
The next rate announcement is scheduled for June 10, 2026. A full 2026 schedule can be found here.
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