The Bank of Canada is widely expected to leave interest rates unchanged at current levels at its next policy meeting on Jan. 28.
Futures markets are pricing in an 89% chance that Canada’s central bank holds interest rates steady at its next meeting.
The Bank of Canada previously kept its trendsetting overnight interest rate unchanged at 2.25% in December following two consecutive 25-basis-point cuts in the second half of 2025.
At the December meeting, Bank of Canada Governor Tiff Macklem said that the central bank believes monetary policy is now at “about the right level.”
Macklem added that inflation is likely to hold at the Bank of Canada’s 2% target over the coming year, but if the outlook changes, the central bank is “prepared to respond.”
Canada’s latest inflation reading showed that consumer prices rose 2.4% last December from a year earlier.
The Bank of Canada is also scheduled to release updated projections for the domestic economy and inflation along with its latest interest rate decision on Jan. 28.
Analysts say that U.S. tariffs remain the biggest risk facing Canada’s economy, although a stock market downturn or other economic shock could prompt the central bank to lower rates in 2026.
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