Canada Interest Rate Forecast 2025-2029

What are the interest rate predictions from the banks?

CIBC

CIBC Economists anticipate the Bank of Canada will deliver quarter-point rate cuts in both July and September, marking the final moves of this easing cycle. This outlook assumes the U.S. does not escalate trade tensions to the point of triggering a global recession. These cuts are unlikely to cause a prolonged decline in the Canadian dollar, as markets are expected to shift focus toward potential Fed rate cuts by year-end—contributing to a broader weakening of the U.S. dollar after an extended period of strength.

RBC

RBC expects the Bank of Canada to have concluded its rate-cutting cycle, following its decision to hold rates steady in June. The BoC pointed to lingering uncertainty around U.S. trade policy and the early impact of tariffs on the Canadian economy as reasons for pausing. With the overnight rate now sitting comfortably within the neutral range, RBC believes further cuts are unlikely—though the Bank may keep the door open to additional easing if economic softness persists and inflation stays under control.

Scotiabank

Scotiabank expects Canada and the U.S. to avoid recessions, barring a major escalation in tariffs or uncertainty. In Canada, fiscal measures will help support growth in the near term, with the potential for further government stimulus. However, persistent inflation remains a key concern, likely limiting the Bank of Canada and the Federal Reserve’s ability to ease policy in 2025. As a result, Scotiabank anticipates both central banks will hold rates steady through 2025, with rate cuts not expected until 2026.

TD Canada

TD expects Canadian economic growth to remain below trend through 2025 and 2026, before stabilizing in 2027. The slowdown is being driven by weaker population growth and the dampening effects of tariffs on both business investment and consumer confidence. While lower interest rates had offered some support to consumer spending, rising prices are expected to erode purchasing power and weigh on demand—pushing the unemployment rate above its long-run average until 2027.

After a stretch of relatively stable inflation, both headline and core inflation are projected to stay above the Bank of Canada’s 2% target through 2025 due to ongoing tariff pressures. TD anticipates the Bank will lower its policy rate back to the estimated neutral level of 2.25% by 2025. As growth catches up to that of the U.S., the Canadian dollar is expected to recover, moving back into the 74–76 U.S. cent range.

BMO

BMO expects the Bank of Canada to resume rate cuts in July, following two holds at 2.75%. While recent inflation data showed some firmness, the Bank is likely to ease if upcoming CPI reports show contained price pressures and growth continues to soften under trade-related uncertainty. BMO forecasts three 25 bp cuts—in July, October, and January—bringing the policy rate to 2.00%, just below the estimated neutral range.