BoC rate hold at 2.25%, oil above $90, and 84,000 jobs gone — what Canadians need to know to protect their finances

On January 28, BoC analysts also chose a rate hold. At the time, Macklem, stated the current policy rate "remains appropriate, conditional on the economy evolving broadly in line with the outlook" but noted that "uncertainty is heightened and we are monitoring risks closely."

While Macklem left further rate hikes — or cuts — as a possibility, this latest rate hold underscores that the global political and economic landscape has become considerably more complex, even in the last few months. Data shows that Q4 2025 GDP contracted 0.6% annualized — worse than the BoC’s prediction of flat economic growth — and February 2026 jobs data is sharply negative. Add to this mix the Iran conflict that began in late February — and sent energy prices surging — and the BoC now faces a classic monetary policy dilemma between weak growth and potential inflation pressure.

The March 18 announcement was not accompanied by a Monetary Policy Report (MPR) — the next MPR is scheduled for April 29, 2026.

Prime rate for all six major banks

The prime rate at all six major Canadian banks remains at 4.45%, effective since October 29, 2025.

TD Bank uniquely applies a higher "TD Mortgage Prime" of 4.60% specifically for its variable-rate mortgage products, while using the standard 4.45% for HELOCs and lines of credit.

Inflation has cooled, but an oil-driven spike may be coming

The most recent CPI data, released March 16, showed headline inflation at 1.8% year-over-year in February 2026 — down from 2.3% in January and 2.4% in December, and the softest reading since July 2025.

The Bank of Canada's preferred core measures also eased: CPI-trim fell to 2.3%, CPI-median to 2.3%, and CPI-common to 2.4%, all converging closer to the 2% target and representing four-year lows for the trimmed-mean measure.

The February deceleration largely reflects base-year effects from the GST/HST tax holiday that ended in mid-February 2025, which affected roughly 10% of the CPI basket. March will be the final month impacted by this distortion.

This should be cause for concern, as core expenses continue to put pressure on Canadian wallets. While gasoline prices fell 14.2% year-over-year in February, these figures predated the Iran-related oil shock. As of this week, Canadians have already begun to feel the impact of higher gas prices at the pump due to this Middle Eastern conflict. Food prices also remain elevated, with grocery inflation at 4.1% and fresh/frozen beef up 13.9%. Perhaps the only stagnant area is housing, as shelter costs, on average, continued to moderate, rising just 1.5% year-over-year.

For the Bank of Canada, the critical forward-looking concern is energy. The Iran conflict that began in late February sent Brent crude — a major benchmark grade of light, sweet crude oil sourced from the North Sea, serving as the primary pricing standard for roughly two-thirds of the world's internationally traded oil — briefly above US$100/barrel before settling around US$90.

BMO's Douglas Porter expects Canadian gasoline prices to rise roughly 15%, which would push headline CPI "towards 3% in coming months." However, economists broadly expect the Bank to "look through" a temporary energy shock as long as core inflation remains anchored near target (2).

A weak economy caught between tariffs, job losses, and geopolitical risk

Canada's economy stumbled into 2026. GDP actually shrank in the final quarter of 2025 — down 0.6% annualized — though that headline number is a bit misleading, since businesses were mostly just running down their inventories. Underneath that, things looked more encouraging: consumers kept spending (up 1.7%) and exports had a strong quarter (up 6.1%). Still, when you zoom out to the full year, 2025 growth came in at just 1.7% — the weakest since 2016 if you set aside the pandemic years. And January 2026? Essentially flat.

Then came the February jobs report, which was pretty alarming by any measure. Canada shed 84,000 jobs in a single month, against expectations of a modest gain of around 10,000. Unemployment climbed to 6.7% as full-time positions fell by 108,000, and youth unemployment crept past 14%. CIBC economist Katherine Judge didn't sugarcoat it, calling it "a very bad report on almost every single measure (3)."

The elephant in the room, as it has been for a while now, is U.S. tariffs.

The picture is complicated. Most Canadian exports to the U.S. — around 89% — are CUSMA-compliant and still cross the border duty-free. But goods that don't qualify face a 10% tariff, while steel and aluminium are hit with 25%, and softwood lumber carries its own separate duties. BMO estimates the average effective tariff on Canadian goods is now somewhere around 6% to 7% (4), which is actually an improvement from the roughly 17% peak in mid-2025, after the U.S. Supreme Court struck down the IEEPA-based tariffs back in February.

In January, the Bank of Canada was projecting 1.1% growth this year and 1.5% in 2027 but this was before the ugly jobs numbers landed and the Iran conflict had started in earnest. Now, the big wildcard is the formal CUSMA review kicking off July 1, 2026. The Bank has flagged it as arguably the single largest macro risk on the horizon, with its own models suggesting that losing the CUSMA exemption could push Canada into a serious recession. Governor Macklem was pretty stark about the broader picture in a February speech (5): "The era of rules-based open trade with the United States is over."

Mortgage rates and a housing market still waiting to recover

If you're shopping for a mortgage right now, the rate picture is a bit more nuanced than the big banks' advertised numbers might suggest.

Fixed rates are anchored to the 5-year Government of Canada bond yield, which is sitting around 3.0% since early March.

The Big Six banks have a posted 5-year fixed rate of 6.09%, but nobody actually pays that — discounted rates in the real world run anywhere from about 3.64% up to 4.19%, depending on who you're borrowing from and whether your mortgage is insured. Brokers and online lenders tend to be the most competitive, clustering around 3.7% to 3.9% for insured mortgages, while the big banks' best discounted offers start closer to 4.19%.

Variable rates are worth a look right now too — for the first time in about three years, they're actually beating fixed rates. The best 5-year variable deals are landing around 3.35% (roughly prime minus 1.10%), though the range runs all the way up to 4.90% depending on your lender and financial profile.

You'd think all those rate cuts — 275 basis points worth that ended in October 2025 — would have lit a fire under the housing market. But so far, not so much. February data from CREA, released just this week, showed national home sales down 8.1% year-over-year, with just over 30,000 homes changing hands. The national average sale price was $663,828 — an average sale price that had barely moved from a year ago. And the MLS Home Price Index is actually down 4.8% year-over-year.

On the inventory side, the nation’s housing market is sitting right at the long-term average of about five months of supply — technically balanced, but not exactly buzzing. Ontario stands out as the weakest spot, with sales running nearly 27% below the five-year average and benchmark prices off 6.7% from last year.

As for where things go from here, CMHC is projecting around 489,000 sales nationally in 2026 at an average price of $698,000, though they're cautious about the pace of recovery — warning that stretched affordability, high carrying costs, and job market jitters will keep a lot of potential buyers on the fence. CREA is a touch more upbeat, forecasting just under 494,500 sales (up about 5%) and an average price close to $699,000, with pent-up demand from first-time buyers expected to gradually work its way through. The optimism is there, but it's measured.

What borrowers are paying on HELOCs, auto loans, and credit cards

If you have a variable-rate product tied to prime, things are meaningfully better than they were a year and a half ago. HELOCs, for example, are typically priced at prime plus somewhere between 0.50% and 2.00% — which, with prime sitting at 4.45% today, works out to roughly 4.95% to 6.45%. That's a significant improvement from the peak, when prime hit 7.20% and HELOC rates were north of 8%. If you've got strong credit and solid equity in your home, some lenders will go as low as prime itself.

Auto loans are a bit of a mixed bag. New car financing averages around 6.5% to 7.5%, though manufacturers occasionally sweeten the deal with promotional rates as low as 0% to 1.99% on select models — worth watching for if you're in the market. Used vehicles are pricier to finance, with rates generally starting around 7.2% and running up to 9.5% or more depending on the lender and your credit history.