A complete guide to the Bank of Canada and interest rates

As with any central bank, when the Bank of Canada (BOC) changes interest rates, it can have a knock-on effect to stocks, indices and currencies. Find out everything you need to know about the BOC and how it’s decisions impact financial markets.


What is the Bank of Canada?

The Bank of Canada is Canada’s central bank, which was created to promote the economic and financial welfare of the country. The BOC is responsible for preserving the value of the Canadian dollar and keeping inflation low through monetary policies, printing money and setting interest rates.

The Canadian Ministry of Finance controls the direction of the bank, and all profits made from the bank’s activities go to the Receiver General of Canada.

The BOC is the equivalent to the Bank of England or Federal Reserve.

What is the Central Bank of Canada’s interest rate?

The Bank of Canada’s interest rate is the cost at which major financial institutions borrow and lend to each other overnight. The BOC sets the target level for the rate in order to influence inflation.

Changes in the Bank’s policy interest rate will influence other interest rates handed down to consumers, such as those on loans and mortgages, as well as the interest earned on savings. The rate decisions can also impact the value of the Canadian dollar.

Overtime, a low interest rate can make the price of imported goods and services more expensive in Canada, while making Canadian exports more appealing. This usually leads to faster inflation. In contrast, a higher interest rate leads to cheaper imports and more expensive exports.

The current interest rate in Canada is 0.25%. The Bank of Canada has kept the country’s interest rate at 0.25 since March 27 2020 at the onset of the Covid-19 pandemic.

The BOC announced in the June 2021 meeting that it would be holding its rate at 0.25% and maintain its quantitative easing programme at $3 billion per week. Despite Covid-19 cases falling and US economic recovery, the economic conditions remains uneven.

BOC interest rate meeting

BOC interest rate

 June 9, 2021 0.25

April 21, 2021


March 10, 2021


January 20, 2021


December 9, 2020


October 28, 2020


September 9, 2020


July 15, 2020


June 3, 2020


April 15, 2020


March 27, 2020


March 16, 2020


March 4, 2020


January 22, 2020


In January 2021, the Bank of Canada has also employed a quantitative easing program of purchasing 4 billion Canadian dollars per week. In the April 2021 meeting, the quantity of Canadian bonds being purchased was lowered to 3 billion per week. This reflects the bank’s hopes for economic recovery and optimism around GDP growth going forward.

The policy will likely stay in place until the 2% inflation target is achieved – which forecasts suggest won’t happen until 2023 – but could be tapered off as growth picks back up.

What is the BOC meeting?

The BOC meeting is when the Governing Council members come together to form a consensus of what target they’ll set for interest rates. The Governing Council consists of the Bank’s Governor, Senior Deputy Governor and four Deputy Governors. The next Bank of Canada interest rate meeting is on June 9 2021.

Bank of Canada interest rate decision dates 2021

The Bank of Canada’s interest rate is set eight times per year. It also releases its Monetary Policy Report, Business Outlook Survey and Survey of Consumer Expectations quarterly. The Bank of Canada’s 2021 calendar is as follows:



Time of announcement

July 5

Business Outlook Survey and Survey of Consumer Expectations

10:30 (ET)

July 14

Interest rate announcement and Monetary Policy Report

10:00 (ET)

September 8

Interest rate announcement

10:00 (ET)

October 18

Business Outlook Survey and Survey of Consumer Expectations

10:30 (ET)

October 27

Interest rate announcement and Monetary Policy Report

10:00 (ET)

December 8

Interest rate announcement

10:00 (ET)

In 2021, the target for the overnight rate will take effect on the business day following each rate announcement. Previously, it came into effect immediately.

How do Bank of Canada interest rates impact financial markets?

The Bank of Canada interest rate is one of the primary factors that impacts the price of the Canadian dollar. Typically, a higher rate is considered bullish for the CAD, while lower rates are considered bearish.

The most watched market around the BOC announcement is the USD/CAD, which usually sees immediate knock-on effects. However, the prices of Canadian stocks – especially bank stocks – will also be susceptible to volatility if the rate is unexpectedly high or low.

When interest rates go up, typically the demand for goods and services declines, which can hit company revenues over the long term. This can cause stock prices to drop. Conversely, when rates fall, company revenues can be expected to rise and investors might increase their position sizes – boosting share prices.

Ready to trade BOC announcements? Take your position on CAD and Canadian stocks with City Index by opening an account today.

Who is the Bank of Canada governor?

The Bank of Canada’s current Governor is Tiff Macklem. The BOC Governor is responsible for ensuring the bank meets its responsibilities of monetary policy, currency supply and fund management.

Each BOC Governor serves a seven-year term, and is elected by the board of directors, who are appointed by Canada’s Minister of Finance.

More from BOC


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.