The Bank of Canada has held its benchmark interest rate steady at 3.25%, citing mixed economic signals and ongoing concerns about housing affordability as reasons for maintaining a cautious approach to monetary policy. The decision, announced Wednesday, was widely expected by financial markets and represents the third consecutive rate hold following a series of cuts that began in mid-2024.
In its accompanying statement, the Bank's Governing Council said the Canadian economy is "operating close to potential" but noted that inflation, while within the Bank's 1-3% target range at 2.4%, remains "sticky" in certain sectors, particularly services and housing. The Bank said it is monitoring the housing market closely, noting that price increases in major urban centres — including Toronto, Vancouver, and Calgary — have accelerated in recent months as lower borrowing costs have stimulated demand.
Impact on Albertans
For Alberta homeowners and prospective buyers, the rate hold provides a measure of stability but does little to address underlying affordability challenges. Calgary's benchmark home price reached $612,000 in January, up 9% year-over-year, according to the Calgary Real Estate Board. Mortgage professionals say the current rate environment is encouraging buyers who had been on the sidelines to re-enter the market, adding upward pressure on prices.
"The rate cuts have helped with monthly payments, but they've also pushed prices up, which is a net wash for a lot of first-time buyers," said Calgary mortgage broker Karen Fung. "The real issue is supply. We need more homes being built, period."
Economic Outlook
Bank of Canada Governor Tiff Macklem said the decision to hold reflects a careful balancing act. "We need to support economic growth while ensuring that inflation continues to move sustainably toward our 2% target," Macklem said at a press conference. "We are not on a predetermined path — future decisions will depend on the data."
Economists are divided on the Bank's next move. Some expect a further rate cut in the spring if economic growth slows, while others argue the housing market's strength may force the Bank to hold or even hike rates later in the year. The Bank's next scheduled rate announcement is April 16.