Bank of Canada Holds Rates at 2.25% as Hopes for a Cut Fade
The Bank of Canada has pressed pause and for millions of Canadians, that decision lands with weight. The central bank has chosen to hold its key interest rate at 2.25 percent, resisting calls for a fresh rate cut and signaling that borrowing costs will stay exactly where they are, for now.
This move marks the second straight hold and it sends a clear message. Policymakers believe the economy is cooling, but not breaking. Inflation has eased back toward the bank’s two percent target. Job conditions, while softer than a year ago, have stabilized. And earlier rate cuts are still working their way through the system. From the Bank’s perspective, this is not the moment to push harder.
Governor Tiff Macklem made it clear that interest rates alone cannot shield Canada from the bigger forces at play. Trade uncertainty, especially around U.S. tariffs and upcoming trade negotiations, remains a major risk. Those pressures can slow growth and hit specific industries, but monetary policy has limits. It cannot undo structural damage caused by trade disputes. It can only support the economy while keeping inflation under control.
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The Bank’s outlook points to modest growth ahead. Canada’s economy is expected to expand slowly through 2026 and 2027. Inflation is projected to hover near target. That balance is why the central bank is choosing patience over action. Cutting rates too soon could reignite price pressures. Raising rates would risk choking off fragile growth. So the Bank is staying put.
For households and businesses, this means stability, but not relief. Mortgage rates, car loans and variable-rate debt will largely remain unchanged. For families hoping for lower monthly payments, the wait continues. For savers, higher rates remain intact a little longer. And for businesses, financing decisions still require caution in an uncertain global trade environment.
What matters most is what comes next. The Bank of Canada has left the door open. If trade tensions worsen or the economy slows more sharply than expected, rate cuts are still on the table. But for now, policymakers are signaling that the current rate is appropriate and that significant moves are unlikely in the near term.
This decision underscores a broader reality. Canada is navigating a narrow path between slowing growth and persistent uncertainty. Every rate decision now carries higher stakes.
Stay with us as we track how this choice ripples through markets, households and the broader economy and as the Bank of Canada prepares for what could be a defining year ahead.
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