This morning, the Bank of Canada made their second announcement of 2026. Their decision to hold the policy rate was well inline with market expectations. This means the Prime Rate should remain at 4.45%.

As indicated in our previous announcements, the Prime Rate directly impacts those who hold variable or adjustable rate mortgages, as well as those with secured or unsecured lines of credit. These rate announcements do not have a direct correlation to fixed rate mortgages, as fixed rates are priced against the bond market. If you're unsure whether you're impacted by this announcement, please reach out or book a time to chat HERE.

While we dive into the economic updates in greater detail below, if you're looking for a quick summary, look no further:

• The Iran War has increased uncertainty and is now leading to higher fuel costs and increased pressure on global inflation;
  
• Canadian bond yields have been increasing, resulting in fixed mortgage rates slightly rising over the last few weeks;
  
• In February, unemployment increased to 6.7% (still a very soft labour market) and CPI inflation decreased to 1.8% (grocery prices are still elevated).

Now, into the meat and potatoes...

The word of the day for the Bank of Canada, and many economists, continues to be uncertainty. One cannot have a conversation, let alone make predictions, without noting the unprecedented levels of uncertainty. This time last year, the reason for the global uncertainty was a result of the United States implementation of tariffs and consistently fluctuating trade policy. And while tariffs are still a major topic of discussion, and a significant factor on the Canadian economic outlook; these last few weeks have seen uncertainty increase further as a result of the Iran War. 

After the onset of the Iran War, we saw:

• The 5yr Canada bond yield increase from 2.604% on Feb 27th to a peak of 3.045% on March 12th. This has resulted in a slight increase to fixed mortgage rates over the last few weeks.
  
• The price of crude oil increase to over $108/barrel (as of 9:05am March 18th). An increase of over 48% since Feb 27th (when it was $72.87).
  
• The Canadian/US Exchange rate has remained relatively stable overall; albeit a couple peaks and valleys.

As a result, there is a (rightfully) growing concern that global inflation could increase especially if the effective closure of the Strait of Hormuz continues indefinitely. With ~20% of the world's oil unable to pass through the Strait, energy prices are expected to continue to increase, thus, passing along the cost to the consumer.

The Bank of Canada expects "...the Canadian economy to grow modestly as it adjusts to US tariffs and trade policy uncertainty, but recent data suggest that near-term economic growth will be weaker than anticipated in January." 

As for additional statistics: in the labour market, unemployment rose to 6.7% in February and CPI inflation decreased further to 1.8% in February. While food inflation slowed, it continues to remain elevated - also contributing to pressures on inflation.

While it is still too early to fully analyze the impact of the Iran War and Middle Eastern conflicts, the Bank of Canada is committed to maintaining and ensuring price stability for Canadians. We will continue to process information in order to appropriately guide our clients forward.

We understand there may still be many questions and concerns amongst our clients and partners. As part of our commitment to providing the most up to date information and comprehensive support, we provide our very own Canadian Mortgage App. Interested in potentially refinancing to make your monthly payments more comfortable? Click HERE to download the app and run various scenarios to see what the best fit may be. 

BANK OF CANADA FULL RATE ANNOUNCEMENT

Information note

As always, we are here to help. If you'd like to chat about your scenario and see what options may be available for you, let us know! We will keep you updated as we receive more information about today's announcement. The next announcement and Monetary Policy Report is scheduled to take place on April 29th, 2026.