A Bank Of Canada announcement on September 17, 2025, declared that the benchmark interest rate has been lowered to 2.5%. This was expected, and the rate has now been unchanged for several months, since March 2025.
Let's take a look at why Canada's central bank decided not to alter the interest rate and how this affects the everyday lives of Canadians.
Bank of Canada rate announcement September 17, 2025
The benchmark interest rate is at 2.5%. This rate has finally lowered after being unchanged for several months.
When the rate increased to 0.5% on March 3, 2022, it began an upward trend that lasted until July 2023. Each BOC announcement during this time saw the interest rate go up by 0.25%, 0.5%, 0.75%, and once even by a full 1%. It has since lowered considerably, bringing us to 2.5% in 2025.
Bank of Canada interest rate history
Here's the history of the central bank's interest rate changes over the past two decades:
| Date | Benchmark interest rate | Change |
|---|---|---|
| Jul 16, 2002 | 2.75% | 0.25% |
| Mar 4, 2003 | 3% | 0.25% |
| Apr 15, 2003 | 3.25% | 0.25% |
| Jul 15, 2003 | 3% | -0.25% |
| Sep 3, 2003 | 2.75% | -0.25% |
| Jan 20, 2004 | 2.5% | -0.25% |
| Mar 2, 2004 | 2.25% | -0.25% |
| Apr 13, 2004 | 2% | -0.25% |
| Sep 8, 2004 | 2.25% | 0.25% |
| Oct 19, 2004 | 2.5% | 0.25% |
| Sep 7, 2005 | 2.75% | 0.25% |
| Oct 18, 2005 | 3% | 0.25% |
| Dec 6, 2005 | 3.25% | 0.25% |
| Jan 24, 2006 | 3.5% | 0.25% |
| Mar 7, 2006 | 3.75% | 0.25% |
| Apr 25, 2006 | 4% | 0.25% |
| May 24, 2006 | 4.25% | 0.25% |
| Jul 10, 2007 | 4.5% | 0.25% |
| Dec 4, 2007 | 4.25% | -0.25% |
| Jan 22, 2008 | 4% | -0.25% |
| Mar 4, 2008 | 3.5% | -0.5% |
| Apr 22, 2008 | 3% | -0.5% |
| Oct 8, 2008 | 2.5% | -0.5% |
| Oct 21, 2008 | 2.25 | -0.25% |
| Dec 9, 2008 | 1.5% | -0.75% |
| Jan 20, 2009 | 1% | -0.5% |
| Mar 3, 2009 | 0.5% | -0.5% |
| Apr 21, 2009 | 0.25% | -0.25% |
| Jun 1, 2010 | 0.5% | 0.25% |
| Jul 20, 2010 | 0.75% | 0.25% |
| Sep 8, 2010 | 1% | 0.25% |
| Jan 21, 2015 | 0.75% | -0.25% |
| Jul 15, 2015 | 0.5% | -0.25% |
| Jul 12, 2017 | 0.75% | 0.25% |
| Sep 6, 2017 | 1% | 0.25% |
| Jan 17, 2018 | 1.25% | 0.25% |
| Jul 11, 2018 | 1.5% | 0.25% |
| Oct 24, 2018 | 1.75% | 0.25% |
| Mar 4, 2020 | 1.25% | -0.5% |
| Mar 16, 2020 | 0.75% | -0.5% |
| Mar 27, 2020 | 0.25% | -0.5% |
| Mar 3, 2022 | 0.5% | 0.25% |
| Apr 14, 2022 | 1% | 0.5% |
| Jun 2, 2022 | 1.5% | 0.5% |
| Jul 13, 2022 | 2.5% | 1% |
| Sept 7, 2022 | 3.25% | 0.75% |
| Oct 26, 2022 | 3.75% | 0.5% |
| Dec 7, 2022 | 4.25% | 0.5% |
| Jan 25, 2023 | 4.5% | 0.25% |
| Jun 7, 2023 | 4.75% | 0.25% |
| Jul 12, 2023 | 5% | 0.25% |
| June 5, 2024 | 4.75% | -0.25% |
| July 24, 2024 | 4.5% | -0.25% |
| Sept 4, 2024 | 4.25% | -0.25% |
| Oct 23, 2024 | 3.75% | -0.5% |
| Dec 11, 2024 | 3.25% | -0.5% |
| Jan 29, 2025 | 3% | -0.25% |
| Mar 12, 2025 | 2.75% | -0.25% |
| Sep 17 | 2.5% | -0.25% |
As you can see, 0.25% increases (or decreases) are the most common by far, allowing the Bank of Canada to make changes without being too disruptive for the everyday Canadian.
But when things heat up, you'll start to see increases around the 0.5% mark – with 1% and 0.75% increases being very, very uncommon.
What the Bank of Canada rate announcement means for you
The Bank of Canada rate is tied directly to the economy. When the rates increase, the prime rate in Canada will increase by the same amount. And the same things happen when the rates decrease.
That means all rates tied to prime will rise or fall in tandem. This includes:
- Variable rate mortgages
- Variable rate loans
- Savings account rates
- GIC rates
When the rates rise, you pay more interest on what you borrow and earn more on what you invest in. When they lower, you won't earn as much on your investments, but you'll save some money on your interest payments.
But since the interest rate has decreased this time, you'll likely see changes to the rates associated with your accounts.
So why does the Bank of Canada raise or lower rates in the first place?
Generally speaking, rates are lowered to encourage spending in order to battle recession. When rates are increased, it's for the opposite effect – to combat inflation.
Canada's inflation rate decreased significantly throughout 2024, hitting 2.5% in July – its lowest point since March 2021. Housing costs remain the biggest driver of inflation.
The current threat of trade tariffs from the new U.S. administration is a big factor contributing to economic uncertainty. These tariffs will likely affect inflation and the BoC's overnight rate.
Watch out for the next Bank of Canada interest rate announcement
With the next Bank of Canada interest rate announcement coming on September 17, 2025, Canadians aren't sure what will happen next.
What do you think of this news?
Let us know in the comments below.
FAQ
What's the current Bank of Canada interest rate?
The Bank of Canada's interest rate has been is 2.5%. This is a decrease of 25 basis points, down from the previous rate of 2.75%. You can see the history of rate changes here.
Why did the Bank of Canada decide to lower the interest rate?
The Bank of Canada has lowered their interest rate in response to weakening inflation and economic growth. Employment rates are slowly growing, too, and the BOC is confident that inflation will soon reach its 2% target.
When's the next Bank of Canada interest rate announcement?
The next Bank of Canada interest rate announcement is scheduled for October 29, 2025. The Bank of Canada meets eight times each year, on predetermined dates, to discuss possible rate changes and announce the resulting decision.
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