BoC: Rates Unchanged, Focus Shifts To Trade And Global Risks
This is a summary of the main highlights following the BoC’s interest rate decision earlier on Wednesday.
- The Bank of Canada held its policy rate at 2.25% as expected, reinforcing a cautious, wait-and-see stance amid lingering uncertainty.
- Beyond the near term, the growth outlook remains soft: 2026 GDP remains at 1.1%, with a sharp downgrade to flat growth in Q4 activity.
- Inflation projections edged lower, with CPI now seen averaging 2.0% in 2026, while estimates for the neutral rate were left unchanged at 2.25%–3.25%.
- Governor Tiff Macklem struck a sober tone on trade, warning that adjustment to US tariffs will be long-lasting and that the era of open, rules-based trade with the US is effectively over.
- Macklem highlighted the increasing geopolitical risks, acknowledging the dent in the US Dollar's safe-haven role and emphasising the crucial need to maintain the Federal Reserve's independence.
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