If you’ve been watching the news lately, you’ve probably noticed a strange disconnect. The economy is clearly under pressure — tariff uncertainty, weak GDP forecasts, unemployment creeping up — and yet the Bank of Canada interest rate isn’t moving. No cuts. Maybe even hikes on the horizon. That doesn’t make sense at first glance. But there’s a reason for it, and if you have a mortgage or you’re thinking about buying a home in Milton or Halton, it’s worth understanding.
Here’s what’s actually going on.
What the Bank of Canada Is Expected to Do on April 29
The next Bank of Canada rate decision lands on April 29, 2026 — and this one is more significant than a routine announcement. It comes with the Monetary Policy Report (MPR), which means the Bank will lay out its full economic outlook, not just announce a number and move on.
The overnight rate currently sits at 2.25%, and it’s been there since December 2025. Before that, the Bank cut rates seven consecutive times — starting from 5.0% back in June 2024 — bringing borrowing costs down substantially over an 18-month stretch. That was a real, much needed relief for variable rate holders and the housing market broadly.
Since December, though, the cuts have stopped. The Bank held in January, held again in March, and market pricing right now is putting the probability of another hold on April 29 at essentially 100%. Nobody on Bay Street is seriously expecting a cut.
The Economy Is Weak — So Why Isn’t the Bank Cutting?
This is the question I get often, and it’s a fair one. When the economy slows, the normal assumption is that the Bank of Canada lowers interest rates to stimulate borrowing, spending and investment. That is the usual playbook.
The problem is that this slowdown is not a normal one.
U.S. trade policy is part of it, and the Bank of Canada has been clear about that. In its January 2026 Monetary Policy Report, the Bank said U.S. tariffs are having a persistent negative impact on the Canadian economy, and projected that by the end of 2026, Canada’s GDP would be about 1.5% lower than it otherwise would have been. So yes, tariffs matter, and they are weighing on growth.
But the inflation side of the story needs more nuance. Tariffs can add to price pressure, but they are not the whole explanation for why life feels expensive in Canada. The Bank’s own estimate was that the peak impact from tariffs on the level of CPI would be only about 0.4% in early 2026. That is real, but it is not enough to explain the broader affordability squeeze on its own.
What many people feel every day is not headline CPI on paper, but the prices that hit them directly at the grocery store, in restaurants and at the gas pump. That is why, even if the official inflation rate looks more contained, it can still feel a lot worse on the ground. In February 2026, food purchased from table-service restaurants was up 7.8% year over year.
That is why I would say it can feel a bit stagflationary, even if it does not fully meet the textbook definition. The bigger issue is that Canada was already vulnerable before this trade fight intensified. We have a weak, low-productivity economy, heavy reliance on imports, and too little productive strength built at home. Tariffs are a headwind, no question. But they are not the whole story, and they are not an excuse for every weakness in the Canadian economy. They are hitting an economy that was already too dependent on imports, too weak on productivity, and too fragile to absorb another shock cleanly.
So the Bank of Canada is dealing with a difficult mix: growth is weak, but it cannot just assume inflation risk is gone for good. That is why rate cuts are not the easy cure-all many people hope they are. If the Bank cuts too quickly, it risks helping on the growth side while reigniting price pressure on the other.
The Part Nobody Is Talking About: Possible Rate Hikes
Here’s where it gets counterintuitive.
While most people are still mentally waiting for more cuts, market pricing is actually starting to factor in the possibility of rate increases later in 2026. As of mid-April, the probability of a hike by June sits around 29%. By October, that climbs to 41%. By December, nearly 50%.
That’s not a certainty — markets have been wrong before. But it’s a meaningful shift. The rate-cutting cycle that ran through 2024 and most of 2025 may be behind us. Where rates go from here is genuinely uncertain, and the range of outcomes now runs in both directions.
What the Bank of Canada Rate Decision Means for Milton and Halton
If you’re on a variable rate mortgage, April 29 brings no relief. Your payment isn’t changing. Watch June and beyond — that’s when there’s at least some possibility of movement in either direction.
If you’re on a fixed rate, you’re mostly insulated from the near-term noise. Fixed rates already reflect what markets are expecting, so they won’t shift dramatically based on April 29 alone.
If you’re a buyer sitting on the fence waiting for rates to fall further — the big rate-cutting cycle already happened. Seven cuts, from 5% down to 2.25%, over 18 months. Whether there’s one more cut ahead is possible but not the base case. And if market pricing is right about hikes later in the year, waiting for dramatically lower rates could mean waiting for something that doesn’t come.
That’s not me pushing you to buy. That’s just an honest read of where things stand.
For sellers, a hold maintains the status quo. Not a catalyst for a rush of buyers, but not a crash trigger either. The market in Milton and Halton stays roughly where it is — cautious, but not frozen.
Will Interest Rates Go Down in Canada? Here’s the Honest Answer
Maybe. The door stays open for one more cut if growth comes in weaker than expected — but that’s not the base case. The more likely scenario is that rates stay roughly where they are, with the next move being a genuine coin flip depending on how inflation and tariff impacts play out through the rest of 2026.
Anyone telling you they know for certain where rates are headed is guessing. Plan for where rates are, not where you hope they’ll be.
If you want to talk through what the April 29 decision actually means for your mortgage, your buying timeline, or your situation specifically, book a Buyer Clarity Call — no pressure, just clarity.
