Yesterday’s Bank of Canada hold means variable rates stay put, while fixed rates will continue to move based on bond yields and inflation expectations—not the Bank’s decision itself.

Here’s a reminder of how these decisions affect fixed & variable interest rates:

🔹 1. Variable rates — “direct connection”

Think of this like a light switch.

• The Bank of Canada sets a key rate

• Banks use that to set prime rate

• Variable mortgages = Prime ± something

👉 So:

• If the Bank raises → variable rates go up

• If the Bank cuts → variable rates go down

• If the Bank holds → variable rates stay basically the same

✔️ That’s why today:
👉 No change = no real change to variable rates (Canadian Mortgage Services)

🔹 2. Fixed rates — “market-driven”

Fixed rates are NOT set by the Bank of Canada directly

Instead, they follow bond yields (especially 5-year bonds)

And bond yields are driven by:

• Inflation expectations

• Economic outlook

• Global events (oil, wars, U.S. economy, etc.)

👉 So fixed rates are more like a stock price — always moving

✔️ Even if the Bank does nothing:

• Fixed rates can go up or down anyway

• Because markets are constantly reacting

(Example: rising oil prices today are creating inflation concerns, which can push bond yields—and fixed rates—around) (Reuters)

🔹 Simple analogy:

• Variable rate = tied to the Bank (like a thermostat you control)

• Fixed rate = tied to the market (like the weather outside)

🔹 What today’s “hold” really means

• ✅ Variable-rate clients: steady / no change

• ⚠️ Fixed-rate clients: still watching inflation + bond market

The takeaway…
Even without a rate change, borrowing costs can still move—so timing and strategy still matter.