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Bank of Canada Policy Rate (Overnight Rate)
- Last updated: — policy rate data and historical series refreshed automatically each day.
The Bank of Canada’s policy rate, also known as the overnight rate, is the central benchmark for Canadian monetary policy. It plays a key role in shaping borrowing costs, inflation expectations, and financial conditions across Canada.
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Note: The Policy Interest Rate (or Target for the Overnight Rate) is the interest rate at which major financial institutions lend one-day funds to each other. It is the primary tool used by the Bank of Canada to control inflation and influence exchange rates and economic growth.
What is the Bank of Canada policy rate?
The Bank of Canada policy rate, formally known as the overnight rate, is the interest rate at which major financial institutions borrow and lend funds overnight. It serves as the Bank’s primary tool for influencing monetary conditions in the Canadian economy.
The policy rate anchors short-term interest rates and provides guidance for how financial conditions should evolve to support stable inflation.
Who decides the rate and what they’re trying to achieve?
The policy rate is set by the Governing Council of the Bank of Canada. Decisions are guided by the Bank’s mandate to promote low, stable, and predictable inflation while supporting sustainable economic growth.
The Bank targets 2% inflation, within a control range of 1% to 3%, and adjusts the policy rate based on inflation trends, economic slack, labour-market conditions, and financial risks.
Why track global policy rates?
Currency movements
Policy-rate differences between countries can drive capital flows, influencing exchange rates as investors seek higher expected returns.
Credit and funding conditions
Central bank rates affect short-term funding costs, which feed through to loans, bonds, and broader credit markets.
Market valuation cycles
Shifts in policy rates change discount rates and growth expectations, influencing equities, housing markets, and commodity prices.
Why this matters for Canadians
Global policy shifts can affect the Canadian dollar, bond yields, and financial conditions that influence future Bank of Canada decisions.
Related Canadian benchmark rates
Canadian Overnight Repo Rate Average (CORRA)
CORRA reflects the actual overnight repo rate based on secured transactions in the Canadian market. It provides a market-based view of short-term funding conditions alongside the Bank of Canada’s policy rate.
- Frequently Asked Questions
Central Bank Rates
FAQs
It is the interest rate targeted by the Bank of Canada for overnight lending between major financial institutions and serves as the core signal of Canadian monetary policy.
Yes. The terms are often used interchangeably, though the official name is the overnight rate.
The Bank of Canada has scheduled policy decision dates throughout the year, typically eight times annually.
The Bank targets 2% inflation, within a control range of 1% to 3%, measured using the Consumer Price Index.
No. Mortgage rates are determined by lenders, but changes in the policy rate influence funding costs and market expectations.
Because interest rate differences influence capital flows and investor demand for Canadian dollar assets.
CORRA is a market-based overnight repo rate, while the policy rate is the central bank’s target used to guide monetary conditions.
Because global policy shifts can influence exchange rates, bond markets, and financial conditions that affect Canada’s economic outlook.
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