Bank of Canada Maintains Policy Rate at 2.25%
On Wednesday, December 10, 2025, the Bank of Canada kept its target for the overnight lending rate at 2.25%, a move that was widely expected by analysts.
Although Canada’s economy beat estimates by growing 2.6% in the third quarter, this was largely due to volatility in exports. The Bank expects Gross Domestics Product (GDP) growth in the fourth quarter of 2025 to be weak as net exports revert to a decline. Meanwhile, trade-sensitive sectors continue to show weak employment.
The Bank noted that Consumer Price Index (CPI) inflation has remained close to its 2% target for more than a year and is expected to stay near that level, apart from some short-term volatility related to last year’s tax holiday on certain goods and services.
With inflation and economic activity evolving in line with the Bank’s projections, it has stated that the current policy rate is “at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment.” However, with uncertainty still elevated due to ongoing tariffs and unpredictable policy from the U.S. administration, this may change.
The Bank of Canada will make its next scheduled interest rate announcement on January 28, 2026. The Bank’s next Monetary Policy Report will be released at the same time.