Bank of Canada says prime lending rate could hit 4.5% by 2026 : My Prince George Now (2024)

FAQs

What will the Bank of Canada interest rate be in 2026? ›

The current focus for the Bank of Canada is bringing inflation back in line with the targeted 2%. The Bank of Canada is anticipated to cut rates by up to 2% over 2024 and another 1% over 2025. In the short term, we're predicting the Bank of Canada will hold the policy rate steady at 5.00% to the end of 2023.

A prime rate or prime lending rate is an interest rate used by banks, usually the interest rate at which banks lend to customers with good credit. Some variable interest rates may be expressed as a percentage above or below prime rate.

If the prime rate rises, the interest rates on your loans and adjustable-rate credit cards will rise as well. Second, the prime rate affects liquidity in the financial markets. When the rate is low, liquidity increases.

Interest rate forecast for 2023: 5.00%*

*Based on September 2023 Canadian economic data. There is a potential chance of 5.25% based on economic activity and inflation numbers.

The current focus for the Bank of Canada is bringing inflation back in line with the targeted 2%. The Bank of Canada is anticipated to cut rates by up to 2% over 2024 and another 1% over 2025. In the short term, we're predicting the Bank of Canada will hold the policy rate steady at 5.00% to the end of 2023.

Bank of Canada Rate Forecast for 2023: Raising to 5.25%

This estimation consists of 2% inflation and 0.5% of real interest rate. Currently, we have an overnight rate of 5% and an inflation rate of 3.3%. So the real overnight rate is 1.7% which is certainly restrictive.

Before the increase in interest rates started last year, the prime rate remained under 4% for more than a decade. However, rates have increased dramatically since March 2022 because the Bank of Canada is trying to keep inflation from rising too quickly and prevent the economy from overheating.

What is the prime lending rate in the US? ›

The current Bank of America, N.A. prime rate is 8.50% (rate effective as of July 27, 2023).

The September Housing Forecast from Fannie Mae puts the average 30-year fixed rate at 7% during the third quarter of 2023, ticking up slightly to 7.1% by year-end. The mortgage giant doesn't expect rates to dip below 6% until 2025. All told, Fannie Mae predicts mortgage rates will average 6.7% in 2023 and 6.5% in 2024.

“All FOMC members believe that rates will be stable or higher through 2023 before slowly coming down in 2024–2025 to settle at a comfortable 2.5% for the longer-term,” she says. Elliot Eisenberg, the Chief Economist at Graphs and Laughs agrees.

US Prime Rate Forecast is at 5.76%, compared to 5.76% last quarter and 5.75% last year. This is lower than the long term average of 5.82%.

Even in 2026 — when, the Fed hopes, inflation will have been fully stamped out and economic growth will have settled back into its longer-run trend — policymakers expect rates to remain well above the levels that prevailed before the pandemic. In other words, higher rates may be here to stay for years.

Mortgage Interest Rate predictions for September 2026. Maximum interest rate 5.74%, minimum 5.25%. The average for the month 5.45%. The 30-Year Mortgage Rate forecast at the end of the month 5.57%.