The Bank of Canada announced Wednesday morning that it is keeping its key interest rate unchanged at 2.25 per cent.
In his prepared remarks, governor Tiff Macklem said that despite steep U.S. tariffs on steel, aluminum, autos and lumber hurting those sectors, the economy has proved resilient overall.
“In the current situation, governing council sees the current policy rate at about the right level to keep inflation close to two per cent while helping the economy through this period of structural adjustment,” he said.
“Nevertheless, uncertainty remains high and the range of possible outcomes is wider than usual. If the outlook changes, we are prepared to respond.”
The decision was widely expected by economists and financial markets.
In October, Macklem had already signalled that policymakers would not be cutting further if economic growth and inflation evolved as forecasted.
On Wednesday, the governor cited improvements in the labour market among the reasons for remaining on the sidelines. In November, the economy gained 54,000 jobs, while the unemployment rate fell to 6.5 per cent from 6.9 per cent in October.
At the same time, gross domestic product (GDP) for the third quarter came in above expectations at 2.6 per cent, compared to a 0.5 per cent projection by the Bank of Canada — though private-sector economists said details in the data were mixed.
And inflation has evolved as central bankers expected.
Some economists believe it is likely the Bank of Canada will keep interest rates unchanged for several months.
“We continue to believe that there is greater chance of a … rate cut than a hike in 2026, even if the most likely outcome is no move at all,” BMO chief economist Douglas Porter said in a note to clients following the announcement.
“As an aside, a year without any rate moves would hardly be an anomaly; fully seven of the past 15 years have seen the bank on hold for a full calendar year.”
The announcement is to be followed by a press conference at 10:30 a.m. with governor Macklem and senior deputy governor Carolyn Rogers.
This is a developing story.
