Canada Interest Rate Forecast 2023-2028

Last Updated: October 25, 2023

Interest rate forecast for 2023: 5.00%*

The prime rate in Canada as of October 25, 2023 is 7.20%. (last change: +0.00% on October 25, 2023)
On Wednesday, October 25th, 2023, The Bank of Canada announced that it will be holding its rate, keeping the policy rate at 5.00%.
The Statistics Canada report published on October 17, shows that Canada’s inflation rate slowed in September to 3.8% from 4.0% in August, which was lower than expected by economists. This decrease was attributed to lower prices for various goods and services, such as travel, durable goods, and some grocery items, leading to a “broad-based” deceleration in the cost of living. On a monthly basis, the cost of living declined by 0.1% in September, the first decrease since November of the previous year. Gasoline prices contributed significantly to the annual rate, falling by 1.3% during the month but still up 7.5% over the past 12 months. Excluding gasoline, the inflation rate would have been 3.7%, down from 4.1% the previous month.
Statistics Canada reported that the Canadian unemployment rate was unchanged at 5.5%, following three consecutive monthly increases in May, June and July.

In 2024, it is expected that the Bank of Canada will cut rates by up to 2% and another 1% in 2025. This will result in lower payments for adjustable rate mortgage holders. We predict that key interest rate will hover around mid 4% in 2024 and mid 3% in 2025. TD economists predict the policy rate can reach 2.25% by 2025 as inflation slows and economic growth decelerates (Source: TD)