As was widely expected, the Bank of Canada elected to hold its trendsetting overnight interest rate at its current level of 2.25%.
Governor Tiff Macklem said the central bank chose to hold interest rates at current levels because the Canadian economy has proven to be “resilient” in the face of U.S. tariffs.
Macklem also reiterated that interest rates are now at the right level to keep Canada’s inflation rate at the Bank of Canada’s annualized 2% target.
“We agreed that a policy rate at the lower end of the neutral range was appropriate to provide some support for the economy as it works through this structural transition while keeping inflationary pressures contained,” said Macklem at a press conference held in Ottawa.
While Canada’s economy continues to expand and the labour force has held up despite U.S. trade actions, Macklem cautioned that “uncertainty remains high” heading into 2026.
If the economy or workforce change in the new year, the Bank of Canada is ready to change tracks and respond, he emphasized.
“As our views evolve, we will update Canadians, we will update markets.”
The central bank governor ended the news conference by noting that strong recent jobs numbers and other economic indicators show Canada’s economy is doing better than expected.
“We are certainly ending the year in a better place than it looked in the middle of the year,” he said.
The Dec. 10 meeting was the final one for the Bank of Canada this year. Its next interest rate decision is scheduled for Jan. 28, 2026.
In 2025, the central bank lowered interest rates in Canada a total of 100 basis points or one full percentage point.
