- The Bank of Canada held its key interest rate at 2.25 per cent for a second straight meeting, a move analysts widely expected
- Governor Tiff Macklem said the economic outlook remains largely unchanged, with modest growth and inflation near the 2 per cent target
- While the Bank said the current rate “remains appropriate,” Macklem’s remarks left open the possibility of future rate cuts or hikes
- The decision comes amid persistent trade uncertainty, including focus on CUSMA and concerns about Canada’s economic outlook later in the year
The Bank of Canada left its key interest rate unchanged at 2.25 per cent on Wednesday, marking the second consecutive meeting in which policymakers opted to keep borrowing costs steady. The decision was widely anticipated by analysts, who expected the central bank to maintain a cautious stance amid ongoing global trade uncertainty.
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Governor Tiff Macklem said in prepared remarks that the Bank’s economic outlook has not shifted “significantly” since the October Monetary Policy Report. He noted that while Canada continues to adjust to trade tensions—particularly those stemming from the U.S.-led trade conflict—the economy is expected to post modest growth in the months ahead. Inflation is also projected to hover close to the Bank’s two per cent target.
In its statement, the Bank said the current policy rate “remains appropriate” given economic conditions. However, the tone of Macklem’s remarks suggested that policymakers remain open to adjusting the rate in either direction, depending on how economic data evolves. The possibility of a future rate cut or hike reflects the Bank’s view that risks remain elevated, and conditions could shift as new information emerges.
The announcement mirrors the Bank’s December decision, when it also opted to hold its policy rate unchanged. Since then, uncertainty around international trade has persisted. Attention continues to focus on the implementation of the Canada‑U.S.-Mexico Agreement (CUSMA) and its potential effects on Canadian exporters, investment trends, and broader economic performance.
With global tensions still clouding the outlook and domestic growth expected to remain moderate, the central bank signaled that its upcoming decisions will be guided by incoming data and the broader evolution of trade conditions.
This comes the same day as the U.S. Federal Reserve’s interest rate decision, where the central bank voted to keep its benchmark interest rate steady at a target range of 3.5 per cent to 3.75 per cent. Fed funds futures trading suggests two quarter percentage point cuts by the end of 2026,
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