Bank of Canada Keeps Policy Rate Unchanged, Citing Steady Inflation but Ongoing Global and Trade-Related Risks

On January 28, 2026, the Bank of Canada announced that it will hold its key policy interest rate at 2.25 per cent, marking the second consecutive meeting with no change in borrowing costs, a decision that was widely anticipated by economists and markets. (Yahoo News)

Key points from the decision:

Rate held at 2.25%: The central bank maintained its policy interest rate, including the overnight target, at 2.25 per cent, with corresponding Bank and deposit rates unchanged. (Bank of Canada)

Cautious economic outlook: Officials said uncertainty around the outlook has increased, driven largely by international trade tensions, unpredictable U.S. policy decisions, and geopolitical risks.(Reuters)

Inflation near target: Inflation remains close to the Bank’s 2% target, supporting the decision to keep rates steady. (Reuters)

Modest growth expected: The Bank projects modest GDP growth over the next two years, reflecting slower population growth and continued pressure on exports, offset by gradually improving domestic demand. (Reuters)

Trade and geopolitical risks: Governor Tiff Macklem highlighted the upcoming CUSMA review as a key risk to Canada’s economic outlook, warning that trade diversification efforts may not fully offset structural damage from increased trade friction with the U.S.(CBC)

Why this matters:
By holding rates steady, borrowing costs for mortgages, business loans, and consumer credit remain unchanged for now. The decision signals that the Bank is prioritizing trade and geopolitical risks over near-term domestic inflation pressures as it navigates an increasingly uncertain global environment. (Yahoo News)

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