Breaking down key terms from the Bank of Canada’s interest rate announcements

Millions of mortgage holders in Canada wait with bated breath for the Bank of Canada’s interest rate announcement conferences which occur eight times per year. The key data everyone is looking for is a potential change in interest rates, as it could lead to massive changes in monthly payments for variable or adjustable rate mortgage holders. 

These conferences are littered with technical terms and economic jargon that might be hard to decipher if you aren’t already an expert on the mortgage market or the economy. 

Let’s break down some of the common terms that might trip you up from the Bank of Canada’s latest interest rate announcement.

You can find past press releases from the Bank of Canada here.


The CPI stands for the Consumer Price Index and is the main measure of inflation that economists use. The CPI is a basket of goods the represents the average Canadian consumers spending habits and includes things like housing costs, groceries, electronics, fuel, and much more.

Housing starts

When the Bank of Canada mentions new housing starts, they’re referring to the number of units that started construction during a specific period of time. While not all new construction projects that are started end up being completed, it’s a good measure of how much the supply of housing is increasing. Each unit being built is counted as one new housing start, so a 50 unit condominium being constructed would add 50 to the count. Analysts evaluate the increases in demand from factors like population growth and cheaper borrowing costs, against the trend of new housing supply to forecast if there will be enough supply to meet demand.

Unemployment rate

The unemployment rate is an important measure of the Canadian job market and marks the percentage of the population that’s eligible for work but not currently employed. The unemployment rate doesn’t count workers who aren’t able to work such as children and the elderly, or workers who aren’t looking for a job.

Key interest rate / policy interest rate / overnight lending rate

The "key interest rate" or the "policy interest rate" refers to the overnight lending rate that is set by the Bank of Canada. This is the interest rate that changes when the Bank of Canada raises or lowers rates, and is the rate at which other financial firms can borrow money from the Bank of Canada. Banks and other financial firms base all of their interest rates on the overnight lending rate, because that is the cost of borrowing for them. As such it is the lowest possible interest rate available.


When the Bank of Canada talks about GDP, or economic growth, they’re referring to the gross domestic product of Canada, which is the measure of the dollar value of all goods and services produced in Canada. When GDP is increasing it’s said that the economy is “doing well”, whereas when GDP is down over multiple periods (combined with other indicators) we are in a recession. A strong economy means businesses doing well which translates to increasing number of jobs, the stock market trending up, and overall more productivity.


The MPR refers to the quarterly monetary policy report put out by the Bank of Canada, which evaluates inflation, the economy, and the Bank of Canada’s future outlook for their monetary policy.

How does the Bank of Canada measure job creation?

In their labour force survey, Statistics Canada evaluates how many new jobs are being added to the job market each period. When the number of new jobs exceeds the expected amount, it’s a sign that the economy is doing better than expected. Currently the Bank of Canada is attempting to curb inflation by slowing demand, which means a strong job market isn’t what they want to see. A large number of new jobs indicates that businesses are still able to spend a lot of capital, which in turn spurs demand and has an impact on inflation. 

If you’re an existing homeowner, sign-up to Perch and find out how much equity you have access to today.

If you’re in the market for a mortgage, you can be pre-approved in as little as 20 minutes when you sign-up to Perch.

See today's best mortgage rates in one click

Take me there