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Bank Of Canada · Canadian Economy · Interest Rates · Monetary Policy
The Bank of Canada maintained its benchmark lending rate at 2.25 percent, signaling rates are at the correct level to support the economy, thereby tempering market expectations for interest rate hikes in 2026.
Policymakers held the rate at the bottom of their 2.25 percent to 3.25 percent neutral range, following 100 basis points of cuts in 2025. Economists from Capital Economics, Servus Credit Union, Oxford Economics, and National Bank of Canada now largely anticipate an extended period of unchanged rates.
Capital Economics' Bradley Saunders dropped his call for an early 2026 rate cut, citing the BoC's expectation of moderate growth and inflation tethered around the two percent target. Servus Credit Union's Charles St-Arnaud stated the global and Canadian economies have shown resilience against U.S. tariffs, suggesting a high threshold for any future rate cuts.
Oxford Economics' Michael Davenport projects rates will hold through 2026, with a potential hike to 2.75 percent not occurring until 2027. National Bank of Canada economists Taylor Schleich and Ethan Currie expect the BoC to hold steady through at least the first half of 2026, advancing their hike call to Q4 2026 only if the unemployment rate falls and inflation heats up, or 2027 if CUSMA talks become problematic.
The central bank balances risks from the U.S. trade war and weakening domestic demand.
Bank of Canada Holds Rates, Tempers 2026 Hike Bets(current)
