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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As December wraps up, the Canadian real estate market is ending 2025 much the way it spent the second half of the year: cautiously, quietly, and in wait-and-see mode.
Activity slowed across most segments, not because of a single shock, but due to a mix of economic uncertainty, affordability fatigue, and seasonal pause.
This feels less like a turning point and more like the market catching its breath.
The Economic Backdrop: Stable, but Not Convincing
Canada avoided a technical recession in 2025, posting better-than-expected GDP growth in the third quarter. On the surface, that sounds reassuring. Dig a little deeper, though, and the picture becomes more nuanced.
Much of the growth was driven by declining imports rather than a meaningful rebound in consumer spending or business investment. In plain terms, people and companies are still cautious. Confidence has not fully returned, and that hesitation continues to spill over into housing decisions.
Presale Market: Very Few Moves, Very Little Urgency
The presale market slowed to a near standstill by November. Only three projects have been launched, representing just 346 units. Notably, none of them recorded meaningful sales.
Some of this slowdown is seasonal. December is rarely an active month for presales. Beyond seasonality, developers appear hesitant to launch into a market where buyers are taking their time and scrutinizing value more closely than they have in years.
Instead, attention has shifted toward purpose-built rental projects, which continue to move forward as long-term plays, supported by population growth and rental demand.
Rental Market: More Supply, More Balance
Purpose-built rental completions increased in 2025, adding meaningful supply to several markets. As a result, rent growth has cooled, and in some areas, tenants are finally seeing some negotiating room.
This does not signal weakness. Demand remains strong, but the rental market is now more balanced than during the peak pressure years.
Resale Market: Buyers Hold the Cards for Now
Resale activity across Metro Vancouver and the Fraser Valley eased further heading into winter. Sales were down more than 15 percent year over year, while active listings remained elevated.
Prices have softened, but not collapsed. Instead, the market is adjusting gradually, with sellers becoming more realistic and buyers gaining leverage, especially those who are well-financed and not in a rush.
Looking Ahead to Early 2026
The early months of 2026 are expected to look much like the end of 2025.
Presale launches are likely to remain limited. Rental demand should stay steady as leasing activity picks up in spring. Resale inventory continues to give buyers choice and flexibility.
For buyers, this environment rewards patience and preparation. For sellers and developers, it is a period that calls for careful pricing and realistic expectations.
Key Takeaways
The economy remains stable, but confidence is still fragile
Presale activity slowed sharply, with few launches and minimal absorption
Rental supply increased, easing upward pressure on rents
Resale buyers currently have negotiating power due to higher inventory
Early 2026 is shaping up as a continuation of this measured, transitional phase
To read more local news and updates, please check our BLOG PAGE To view Geoff Jarman’s Listings, CLICK HERE
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