On Wednesday, January 28, 2026, the Bank of Canada held its target for the overnight lending rate steady at 2.25% for the second consecutive time, a move widely expected by analysts.

As forecast by the Bank, Canada’s Gross Domestic Product (GDP) marked robust growth in the third quarter of 2025 but is expected to be flat in final quarter of the year, when that data is released. Exports to the United States are acting as a drag on economic growth due to ongoing tariffs.

Meanwhile, the Bank noted that although employment numbers have picked up in recent months, the unemployment rate remains elevated, particularly for younger people. It’s survey of businesses also reveals few of them intend to increase their workforces.

The Bank projects economic growth of only 1.1% in 2026, as slower population growth and adjustments to U.S. protectionism act as headwinds on Canada’s economy. It also referenced the upcoming review of the Canada-US-Mexico (CUSMA) agreement as one of the major sources of uncertainty it’s watching this year.

The Consumer Price Index (CPI) inflation has been slowing recently and is trending closer to the Bank’s 2% target. Although CPI inflation is expected to stay near that level over the projected horizon, the Bank noted in its January Monetary Policy Report (MPR) inflation for items such as food services and rent remain well above their long-term averages.

https://www.crea.ca/media-hub/news/bank-of-canada-maintains-policy-rate-at-2-25-2/