Bank of Canada holds rates at 2.25%, as expected; uncertainty is heightened and are monitoring risks closely, and if the outlook changes, prepared to respond

Monetary Policy:

• Monetary policy focused on keeping inflation close to the 2% target while helping the economy through this period of structural adjustment.
• Governing Council judges the current policy rate remains appropriate, conditional on the economy evolving broadly in line with the outlook they published today.
• However, uncertainty is heightened and are monitoring risks closely. If the outlook changes, are prepared to respond.
• The Bank is committed to ensuring that Canadians continue to have confidence in price stability through this period of global upheaval.

Outlook:

• The outlook for the global and Canadian economies is little changed relative to the projection in the October MPR. However, the outlook is vulnerable to unpredictable US trade policies and geopolitical risks.

Economy:

• The Bank expects global growth to average about 3% over the projection horizon.
• Global financial conditions have remained accommodative overall.
• Economic growth is projected to be modest in the near term as population growth slows and Canada adjusts to US protectionism.
• The Bank projects growth of 1.1% in 2026 and 1.5% in 2027, broadly in line with the October projection. A key source of uncertainty is the upcoming review of the Canada-US-Mexico Agreement.

Trade:

• US trade restrictions and uncertainty continue to disrupt growth in Canada.
• After a strong Q3, GDP growth in the Q4 likely stalled. Exports continue to be buffeted by US tariffs, while domestic demand appears to be picking up.

Inflation:

• Inflation was 2.1% in 2025 and the Bank expects inflation to stay close to the 2% target over the projection period, with trade-related cost pressures offset by excess supply.