As of July 9, 2025, RBC’s latest Monthly Forecast Update delivers a pivotal shift: they no longer expect the Bank of Canada (BoC) to cut interest rates this year, projecting the overnight rate will stay firm at 2.75% through 2026 mpamag.com+4canadianmortgagetrends.com+4reddit.com+4.

🔍 What’s behind RBC’s revised stance?

1. Trade uncertainty isn’t as pressing
   RBC highlights that “direct trade uncertainty facing Canada recedes,” a dynamic that eases inflation pressures and diminishes the BoC’s perceived need for further rate relief rbc.com+3canadianmortgagetrends.com+3canadianmortgagetrends.com+3.

2. Inflation remains stubbornly elevated
   Despite cooler global tensions, the inflation outlook hasn’t entirely improved—a scenario that restricts further easing canadianmortgagetrends.com+5nesto.ca+5rbc.com+5canadianmortgagetrends.com.

3. Diverging forecasts across Canada’s Big Six

   • RBC projects the terminal rate at 2.75%, the most conservative among peers.

   • Scotiabank initially forecast no further cuts, though its projection softened to 2.25% recently ca.finance.yahoo.com+13canadianmortgagetrends.com+13myperch.io+13.

   • BMO remains the most dovish, seeing rates fall to 2.00% by early 2026.

   • TD, CIBC, National Bank also lean toward 2.25%, in line with core inflation forecasts nesto.ca+2canadianmortgagetrends.com+2canadianmortgagetrends.com+2.

🎯 What this means for homeowners and borrowers

• Variable-rate mortgages
  If you’re on a variable mortgage, stable BoC policy means no more downward pressure on your mortgage rate—your payments won’t further decrease unless lenders cut prime rates.

• Fixed-rate mortgages
  Those locking into 5-year terms might see limited benefit from holding off; rates are unlikely to decline as expected early in the year.

• Housing affordability & refinancing
  With rates poised to stay elevated for longer, housing affordability remains tight. Borrowers should ensure they’re in the best possible position before renewing or refinancing.

📊 Broader market context

• GDP surprises BoC watchers
  Canada’s Q1 GDP delivered better-than-expected growth (~2.2% annualized), defying recession fears reddit.comnesto.ca+3canadianmortgagetrends.com+3canadianmortgagetrends.com+3. As a result, many economists abandoned predictions of a June rate cut and pushed anticipated easing into late summer.

• Tariffs ease—but inflation stays sticky
  While some trade friction has subsided, core inflation remains at or above 2%, keeping BoC cautious canadianmortgagetrends.com+6canadianmortgagetrends.com+6myperch.io+6.

🎥 RBC’s Take – Explained on Video

For a clear, concise breakdown, check out this YouTube video from RBC that lays out why rate cuts are off the table—and what it means for borrowers:

✅ Bottom line for borrowers

• No relief on the horizon: RBC sees BoC’s overnight rate capped at 2.75% through 2026—no cuts expected this year youtube.com+1rbc.com+1ca.finance.yahoo.com+4canadianmortgagetrends.com+4canadianmortgagetrends.com+4.

• Borrower action: It’s time to review mortgage options—lock in a fixed rate if stability matters, or stay variable if your lender offers competitive pricing.

• Macro lens: Healthy GDP and contained inflation reinforce BoC’s cautious stance.

🔮 What to monitor next

Let me know if you’d like to explore how this outlook could affect refinancing your mortgage, investing in real estate, or timing your next rate lock.

Recommended actions for homeowners and buyers:

• Compare fixed vs. variable mortgage strategies with current lender offerings.

• Consider shorter-term fixed mortgages if you expect lowered rates in late 2026 or beyond.

• Watch for BoC announcements and core CPI data—they’ll shape the next policy pivot.