Market News
Bank of Canada maintains key interest rate at 2.25%, says 'timing or direction' of next rate change uncertain
The Bank of Canada (BoC) held its overnight interest rate steady at 2.25 per cent on Wednesday in a move widely expected by economists. The announcement comes amid ongoing trade uncertainty, with increased focus on the Canada-U.S.-Mexico Agreement (CUSMA) and a murky outlook for the Canadian economy later in the year.
In its release, the BoC said its policy rate “remains appropriate” for current economic conditions, but the text of Governor Tiff Macklem’s opening remarks suggests a cut or hike could be in play in the decisions ahead.
“While Council judges the current policy rate is appropriate based on our outlook, the consensus was that elevated uncertainty makes it difficult to predict the timing or direction of the next change in the policy rate.”
The BoC’s updated economic outlook, outlined in a new Monetary Policy Report, echoes that ambiguity. The outlook is “little changed” from projections released in October, according to the release, but “is vulnerable to unpredictable U.S. trade policies and geopolitical risks.”
Ahead of the announcement, economists polled by Reuters were unanimous in their expectations for a hold today, and nearly 75 per cent forecast the central bank will stay on hold through 2026.
In its December decision the Bank also held its policy rate stable.
