Interest Rates in Canada: Rate Cuts Remain Uncertain in 2026

On January 28, 2026, the Bank of Canada decided to hold its key interest rate, signaling a cautious approach to monetary policy. While inflation in Canada is moving closer to the 2% target, price pressures remain uneven, particularly in the housing and services sectors.

The Canadian economic outlook points to a moderate slowdown rather than a sharp downturn. Consumer spending has softened, business investment remains cautious, and the labour market continues to show resilience. As a result, the Bank of Canada is waiting for clearer and more sustained evidence before considering further interest rate cuts.

Looking ahead to the rest of 2026, modest mortgage rate reductions remain possible if inflation continues to ease and economic growth weakens further. However, the message is clear: any easing cycle is likely to be slow and limited. Interest rates in Canada are therefore expected to remain relatively stable in the near term.

For home buyers, sellers, and real estate investors, this means planning carefully and avoiding assumptions of rapid interest rate declines in 2026.