Here we are again, another Bank of Canada announcement, another day of holding our collective breath, and another day of… well… exactly what everyone expected.
On Wednesday, March 18th, 2026. The Bank of Canada (BoC) just stepped up to the podium and announced they are holding the overnight rate steady at 2.25%. This is the rate that banks use to set their prime rate, which will remain at 4.45%.
And honestly? This was the general expectation. While the war in Iran had some people wondering if we’d see a potential hike just to keep things stable, the consensus was still for a hold. So, no shock… just Tiff Macklem and the crew hitting the pause button.
If you caught last week’s blog, you know we’ve been tracking this volatility closely. The market has been a rollercoaster… and today’s decision is just another loop-de-loop in what I’m calling the “Latest Waiting Game.”
Let’s break down why this happened… what’s actually going on behind the scenes… and what it means for your wallet.
The Inflation Paradox… 1.8% Should Be Enough, Right?
Inflation was down to 1.7% in January and 1.8% in February, according to Statistics Canada. Think about that for a second… the Bank’s holy grail… their target… is 2.0%. We are actually below the target. In any normal economic cycle, a 1.8% inflation rate would have the BoC slashing rates faster than a clearance sale at a department store.
But they didn’t.
Why? Because the Bank isn’t just looking at the number today… they are looking at the “what ifs” of tomorrow. It’s like they’re staring at a clear sky but refusing to put away the umbrella because they see a dark cloud 50 miles away.
They are worried that if they cut too soon, inflation will come roaring back… and they’ll look like they lost control. It’s a game of chicken… and right now… the Bank is refusing to blink.
The “Iran Factor” and the Ghost of High Oil Prices
If you want to know why your mortgage rate isn’t dropping today… look at the map. Specifically… look at the Middle East.
The “Iran factor” is looming large over this decision. With tensions escalating and the potential for supply chain disruptions… oil prices are the big wildcard. When oil goes up… everything goes up. It costs more to ship your groceries… it costs more to heat your home… and it costs more to fill your tank which I’m sure you’ve noticed.
The BoC is terrified that a spike in energy prices will bleed into core inflation. If they cut rates now… and oil hits $120 a barrel next month… they’re in a world of hurt. They’d be forced to hike rates right back up… and potentially more than expected. This would be a disaster for market stability.
So… they wait. They’re watching the tankers… they’re watching the headlines… and they’re keeping their rate steady as a “buffer” against global chaos.
The US Deficit… A Weight Around Our Necks
It’s not just the Middle East… it’s our neighbours to the south too.
The US deficit is ballooning. When the US government spends like there’s no tomorrow… it puts upward pressure on bond yields. And because the Canadian bond market is essentially hitched to the back of the US bond market… when their yields go up… ours typically follow.
Fixed Mortgage Rates Have Been Rising
We’ve seen the 5-year Government of Canada bond yield increase over the past few weeks. I’m happy to say that they have dropped over the past few days, however, they still remain at elevated levels. While this may be some relief to the upward fixed rate pressure we’ve recently experienced, I wouldn’t start celebrating just yet. Even though the BoC held the overnight rate, it’s still uncertain as to the direction of fixed mortgage rates over the next few weeks.
Overall, fixed mortgage rates have increased anywhere from 0.05% to 0.20% over the past few weeks. This is exactly why I’ve been advising to lock something in. Waiting could very well result in having to accept a higher rate, as it is with the situation now. If rates drop, we can always get your rate lowered for you, or even move you to a different lender if there is enough time.
If you’re nearing a mortgage renewal… this is the kind of stuff that keeps you up at night. The only way to relieve this worry is to give yourself a guarantee that you’ll close at the lowest rate possible, and that can only be accomplished by locking something in now… with no downside.
The Market is Volatile… Don’t Get Caught Off Guard
The theme for 2026 is definitely “Volatility.”
We’ve seen bond yields continue to rise despite previous rate cuts… and we’ve seen how global tariffs can mess with our local economy.
The Bank of Canada is trying to steer a massive ship through a very narrow, very rocky channel. They’re being cautious… maybe too cautious for some… but their goal is to avoid a wreck.
For you… the homeowner or the buyer… the goal is to protect your equity and your cash flow. Don’t just sit there and let the “Waiting Game” play you. Be proactive. Look at your options. Maybe a 3-year fixed is the right choice to limit your commitment. Or perhaps a 5-year fixed to carry you through potentially longer periods of uncertainly. Everyone’s situation can be a bit different.
3 Year vs. 5 Year Fixed: Which Mortgage Strategy Wins in 2026?
FAQ: The Quick Breakdown
Why did the Bank of Canada hold rates today?
Even though inflation is down to 1.8%, the BoC is worried about external “shocks.” Specifically, the conflict in the Middle East (the Iran factor) and the rising US deficit. They want to make sure inflation stays down before they commit to more cuts.
When will mortgage rates finally go down?
The “official” overnight rate will likely start dropping again later this year… if the global situation stabilizes. However, fixed mortgage rates are tied to bond yields, which are currently volatile. We might see fixed rates stay flat or even rise slightly before they truly head south.
Should I wait to renew my mortgage?
Waiting is a gamble. If you have a renewal coming up in the next 4 months, you should be talking to a broker now. Locking in a rate hold costs you nothing… but it protects you if the “Waiting Game” turns into a “Hiking Game” because of global oil prices.
Final Thoughts
The Bank of Canada is playing it safe… and while that’s not exactly thrilling if you’re watching your payments like a hawk… it was the expected outcome. 4.45% is where the prime rate will stay for now. The “Iran factor” and the US deficit are the ghosts in the machine… and until they fade away… the BoC is going to keep their finger off the “cut” button… which simultaneously keeping another finger on the “hike” button. Even the Bank of Canada doesn’t know what their next move will be.
But you don’t have to play their game. You can make your own moves. Whether it’s looking at a shorter-term fixed rate or staying the course with a variable… the best thing you can do is stay informed and stay prepared.
If you’re feeling unsure about your next move… or if your renewal is staring you in the face… don’t do it alone. Reach out to us. We live and breathe this stuff every day… and we can help you find the logic in the chaos. contact us today and let’s put a plan together that actually works for you… not your bank.
Stay smart… stay patient… and we’ll get through this waiting game together.
You can read the full announcement from the Bank of Canada here. The next scheduled announcement is set for April 29th, 2026.
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