The Bank of Canada opted to leave its benchmark interest rate unchanged at 2.25 per cent on Wednesday, saying the economy continues to withstand tariff-related shocks and is progressing along its expected path. The decision follows an October quarter-point cut and comes amid stronger-than-expected employment and GDP gains.
Governor Tiff Macklem said inflation remains contained, though trade uncertainty and U.S. tariff moves continue to apply pressure. Recent data showed Canada’s economy expanding at an annualized 2.6 per cent in the third quarter and unemployment dropping to 6.5 per cent in November. Macklem noted that while the figures exceeded projections, they did not alter the Bank’s core outlook for moderate growth through 2026. He cautioned that volatility in trade flows is making it harder to read the underlying trajectory of the economy, describing the current moment as a “structural transition” rather than a routine downturn.
With the upcoming USMCA review expected to heighten policy uncertainty, the Bank signalled no urgency to adjust rates further after lowering them by a full percentage point over the course of the year.
