As the Bank of Canada adjusted its key interest rate once again this June, consumers across the country are feeling the effects — from mortgages to car loans to savings accounts. Here's what you need to know.
In its June 2025 update, the Bank of Canada held the overnight rate at 4.75%, citing slowing inflation and cautious optimism about the country’s economic trajectory. While some economists predicted a cut, Governor Tiff Macklem said the bank was not yet confident inflation was "sustainably on track" to its 2% target.
"We’re seeing encouraging signs, but it’s too early to declare victory," said Macklem.
For Canadians with variable-rate mortgages, the rate hold provides a brief reprieve, but no real financial relief just yet. Many homeowners are still paying hundreds more per month compared to early 2022.
Fixed-rate mortgage borrowers, meanwhile, are seeing slightly more competitive offers as bond yields stabilize — but rates remain significantly above pre-pandemic levels.
Interest rates on credit cards and personal loans remain high, with average credit card APRs hovering around 20%. Consumers carrying balances are urged to consider consolidation options or lower-rate lines of credit.
The good news? High interest savings accounts and GICs (guaranteed investment certificates) continue to offer competitive returns, with some one-year GICs now above 5%. It’s a welcome change for conservative investors who were sidelined for much of the past decade.
Canada’s annual inflation rate dipped to 2.3% in May, its lowest point since mid-2021. Food prices have started to level off, though rent and service costs remain elevated in urban centres.
The central bank has signalled that it could consider cuts later in the year — but only if inflation continues its downward trend without sudden shocks.
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Subscribe NowAnalysts are split on the future. Some predict a 0.25% rate cut as early as September, while others expect the Bank to hold until December to ensure inflation pressures don’t rebound.
Consumers, meanwhile, are advised to proceed with caution. “Avoid over-leveraging now,” said BMO economist Julia Nguyen. “The rate environment may ease, but not overnight.”
The bottom line: while Canadians aren’t seeing rate cuts yet, there’s a growing sense that the worst may be behind us — cautiously.
