(Photo: Bank of Canada)
Ottawa, ON — January 28, 2026 — The Bank of Canada announced today that it will maintain its benchmark overnight interest rate at 2.25 %, keeping borrowing costs unchanged amid ongoing domestic and global economic uncertainty.
Governor Tiff Macklem and the Bank’s Governing Council said that while inflation remains close to the 2 % target and growth is modest, elevated uncertainty — including unpredictable U.S. trade policies, geopolitical tensions, and global market volatility — makes the timing and direction of the next rate move difficult to forecast. (bankofcanada.ca)
“The Governing Council judges that the current policy rate remains appropriate based on our outlook,” Macklem said. “However, elevated uncertainty makes it challenging to predict the timing or direction of future changes.”
Why the Hold Matters
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🏦 Rates unchanged at 2.25 %: The Bank has now held the overnight rate steady since December 2025, reinforcing a cautious approach amid ongoing economic risk.
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📉 Inflation near target: Consumer price growth remains in line with the Bank’s 2 % objective, providing flexibility for the Bank to respond to changing conditions.
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📊 Modest growth outlook: Canada’s GDP is projected to grow slowly, with risks weighted toward global trade disruptions, geopolitical pressures, and structural shifts in the economy.
Market and Public Impacts
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Mortgage and borrowing costs: With the policy rate unchanged, variable mortgage rates and consumer loans are expected to remain stable in the near term, providing relief for households after prior periods of rate tightening.
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Business investment and hiring: Firms are cautiously managing investments and hiring plans, reflecting both domestic uncertainty and ongoing trade tensions.
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Currency reaction: The Canadian dollar showed modest strength following the announcement, reflecting market confidence in the Bank’s steady stance.
Context: Trade and Global Risks
The decision comes amid heightened tensions in Canada–U.S. trade relations, including recent U.S. tariff threats on Canadian goods. Such external factors continue to influence the Bank’s risk assessment and policy outlook. (reuters.com)
The next scheduled rate announcement is set for March 18, 2026, when the Bank will reassess economic conditions and decide whether to adjust the overnight rate.