No Change in 2.25% Overnight Bank of Canada Interest Rate
January 28, 2026
The Bank of Canada’s decision to hold its interest rate level at 2.25% was as expected, and the quarterly Monetary Policy Report made scant changes to the 2026 and 2027 growth and inflation forecasts. From a peak of 5.0% from July 2023 to an initial rate cut in June of 2024, the policy interest rate was lowered by 175 basis points during the rest of 2024 and four more times during 2025, each of which amounted to 25 basis points. The bank’s medium term inflation target is 2.0%, and inflation ended last year at 2.4%, just slightly above that objective. Projected GDP growth this year of 1.1% and next year of 1.5% would be a touch slower than experienced in 2025, and inflation is expected to hover near the target in each of the coming years. U.S. tariffs against Canada and the persistence of uncertainty regarding possible changes to those tariffs are a depressant on growth and a potential upside risk to inflation.
Governing Council judges the current policy rate remains appropriate, conditional on the economy evolving broadly in line with the outlook we published today. However, uncertainty is heightened and we are monitoring risks closely. If the outlook changes, we are prepared to respond.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Bank of Canada
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