Latest bank decision: At its meeting on 12 December, the Swiss National Bank (SNB) decided to lower the policy rate...
Target for the Overnight Rate in Canada
From 2013 to 2022, Canada's central bank policy rates experienced cycles of reduction and increase. The rates were lowered to near-zero during the COVID-19 pandemic to support the economy. However, as the economy began recovering, the central bank increased rates to manage inflationary pressures.
The Target for the Overnight Rate ended 2022 at 4.25%, up from the 0.25% end-2021 value, and significantly higher than the reading of 1.00% a decade earlier. For reference, the average policy rate in Major Economies was 3.50% at the end of 2022. For more interest rate information, visit our dedicated page.
Canada Interest Rate Chart
Note: This chart displays Policy Interest Rate (%) for Canada from 2020 to 2018.
Source: Macrobond.
Canada Interest Rate Data
| 2019 | 2020 | 2021 | 2022 | 2023 | |
|---|---|---|---|---|---|
| Target for the Overnight Rate (%, eop) | 1.75 | 0.25 | 0.25 | 4.25 | 5.00 |
| 3-Month T-Bill (%, eop) | 1.66 | 0.06 | 0.16 | 4.23 | 5.04 |
| 10-Year Bond Yield (%, eop) | 1.71 | 0.71 | 1.49 | 3.30 | 3.11 |
Bank of Canada decreases rates in December
Latest bank decision: At its meeting on 11 December, the Bank of Canada reduced its target for the overnight rate to 3.25% from 3.75%, taking rate cuts to 175 basis points this year.
Monetary policy drivers: The decision was driven by a weaker-than-projected economy in Q3 and Q4, rising unemployment and moderate price pressures—inflation has hovered close to 2.0% in recent months.
More easing likely ahead: The Bank of Canada suggested that interest rates would fall further going forward, but didn’t say exactly when or by how much. Our Consensus is currently for the target for the overnight rate to fall below 2.50% by the end of 2025, as the Bank looks to support the economy in the face of mild price pressures.
Panelist insight: TD Economics’ James Orlando said: “We don't think the BoC will keep cutting at this current pace. The policy rate is in the bank's 'neutral' range (2.25% to 3.25%), which means it probably thinks its rate is no longer weighing on economic growth. The central bank will also be getting more evidence over the coming months that economic growth is stabilizing around trend. Stronger growth will validate that it can cut at a slower pace. If it doesn't, policy rate differentials with the U.S. will widen even more.” EIU analysts said: “We anticipate that the BoC will implement one rate cut per quarter throughout 2025, amounting to a total of 100 basis points of additional easing. This forecast is contingent upon external factors, notably the potential for a trade conflict with the US. The US president-elect, Donald Trump, has proposed imposing tariffs on Canadian exports, which could significantly disrupt trade flows. Although we do not expect the threat to be immediately implemented, should such measures be enacted, the BoC may be compelled to enact further rate cuts to mitigate the adverse effect on Canadian economic growth.”
Consensus Forecasts and Projections for the next ten years
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Canadian interest rate projections for the next ten years from a panel of 23 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts and averaged to provide one Consensus Forecast you can rely on for each indicator. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable interest rate forecast available for Canadian interest rate.
Download one of our sample reports to visualize what a Consensus Forecast is and see our Canadian interest rate projections.
Want to get access to the full dataset of Canadian interest rate forecasts? Send an email to info@focus-economics.com.
Latest Global Monetary Policy News
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Switzerland: Swiss National Bank decreases rates in December -
Peru: Central Bank of Peru keeps rates unchanged in December Latest bank decision: At its meeting in December, the Central Bank of Peru (BCRP) decided to keep the policy interest... -
Serbia: NBS leaves rates unchanged in December NBS holds for third consecutive meeting: At its meeting on 12 December, the Executive Board of the National Bank of... -
Canada: Bank of Canada decreases rates in December Latest bank decision: At its meeting on 11 December, the Bank of Canada reduced its target for the overnight rate... -
Australia: Central Bank stands pat but turns dovish in December Bank delivers widely expected hold: At its meeting on 9–10 December, the Reserve Bank of Australia (RBA) decided to leave... -
India: RBI holds rates in December, but first rate cut since May 2020 looms Bank stands pat: At its meeting on 6 December, the Monetary Policy Committee of the Reserve Bank of India (RBI)... -
Kenya: Central Bank cuts rates further in December Bank delivers larger-than-expected cut: On 5 December, the Central Bank of Kenya (CBK) decided to lower its policy rate by...