How the Bank of Canada rate shapes yours

One policy rate upstream of nearly every rate on this site.

Eight times a year, the Bank of Canada sets its policy rate — the target for the overnight rate, 2.25% today. It's the price banks pay to borrow from each other overnight, and it is the lever the Bank pulls to cool or stimulate the economy.

Commercial banks translate it into their prime rate — 4.45% today — the benchmark they lend against, which historically sits about two percentage points above the policy rate and moves within days of it.

What moves when it moves

Variable mortgages and HELOCs are priced as a spread on prime ("prime − 0.50%", "prime + 0.80%"), so their cost changes the moment prime does — no renewal needed. Savings-account and GIC rates follow the policy rate's direction with a lag: when the Bank cuts, new GIC rates drift down; when it hikes, they climb. Fixed mortgage rates are the loose end — they track bond markets' expectations of future policy moves rather than the rate itself, which is why they sometimes move first.

Source: Bank of Canada, month-end values.

Watch GIC rates follow it

The Bank of Canada also tracks what the big banks post for GICs. Watch the same five years through that lens: posted GIC rates climbed through the 2022–23 hikes and drifted down as cuts arrived — the policy rate's path, echoed with a lag.

Source: Bank of Canada, month-end values.

Those are posted averages — the big-bank baseline, not what a rate-shopper actually settles for. Online banks and credit unions routinely beat them by a full point or more, which is exactly the gap our GIC boards exist to show you.

How to use this

A GIC locks today's rate for its whole term — so where the policy rate sits in its cycle matters to whether locking long looks smart. A variable mortgage is a bet that the line above trends down before your renewal. Neither call is ours to make for you; the chart is the context for making it.

Compare GIC rates → · Compare mortgage rates →