The rate has remained at this “effective lower bound” since late March, when it plunged from 1.75% amid the confusion and uncertainty of the pandemic lockdown.

The bank notes that both the Canadian and global economies are recovering in line with their predictions from July as containment measures lift. But despite the positive signs — including stronger employment, household spending and exports — the bank expects a “slow and choppy” recovery ahead.

A lopsided recession

Woman in home isolation
Zigres / Shutterstock

When the pandemic first arrived and shut down gatherings and non-essential businesses, some people suffered more than others. The recovery has been no different.

Employment for low-wage workers has only reached 87.4% of its pre-pandemic level, compared to 99.1% for all other workers. Statistics Canada says the gap is driven entirely by losses in the service industry.

Most workers at restaurants, retail stores and hair salons aren’t in a position to work remotely. The Bank of Canada adds that many of those jobs are held by women and youth, who are more likely to be laid off permanently instead of temporarily.

“Uneven outcomes for some can lead to poorer outcomes for all,” Macklem says.

“Thus, even if monetary policy cannot target specific sectors, it is important for us to understand the uneven impacts of this recession and to make policy decisions that support lasting, broad-based growth.”

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Relief for all

Family with roof over their heads as house construction goal concept
Robert Kneschke/Shutterstock

The overnight rate is one tool the Bank of Canada is using to lighten the load on everyone.

“By maintaining low interest rates, the Bank is supporting consumer spending and business investment by making borrowing more affordable,” Macklem says. “Given the depth of the economic hole, it’s clear much of this support will be needed for some time.”

Though the central bank doesn’t directly control the interest you pay on mortgages, loans and credit cards, it does have a major influence. A low overnight rate makes it cheaper for commercial banks to do business, and they respond by lowering the prime rate — the interest they charge their best customers.

Canada’s prime rate sits at just 2.45%, the lowest it has been since the 2008 financial crisis. The number is used to set interest rates on everything from variable mortgages to car loans, home equity lines of credit and even certain types of credit cards.

So long as your credit score is healthy, now is an ideal time to borrow money.

You’ll be able to get a tremendous rate, whether you want to buy a home, save on your monthly payments by refinancing your mortgage or replace your high-interest credit card debt with a low-interest loan.

That said, when it comes to big purchases, you’ll still want to shop around to a number of different lenders. Especially when buying a home, small differences between rates can save you hundreds or thousands of dollars.

If you don’t have the time, a mortgage broker can do that hunting for you, free of charge. One brokerage, Homewise, will negotiate on your behalf with more than 30 banks and other lenders to try to find you the best mortgage, and you can apply online in just a few minutes.


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Ethan Rotberg Former Reporter

Ethan Rotberg was formerly a staff reporter at, based in Toronto. His background includes nearly 15 years as a writer, editor, designer and communications professional. His work has appeared in the Toronto Star, CPA Canada and Metro, among others.

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