The Bank of Canada is widely expected to hold interest rates at current levels at the conclusion of its final policy meeting of the year on Dec. 10.
Economists widely anticipate that the central bank will move to the sidelines after steadily lowering interest rates throughout the year to help Canada’s economy deal with trade turmoil.
The Bank of Canada’s trendsetting overnight interest rate currently stands at 2.25%, a full percentage point lower than where it was at the start of 2025.
Futures markets are pricing in a 93% chance that Canada’s central bank stands pat on interest rates at its December meeting.
A surprisingly resilient labour market and a better-than-expected 2.6% rise in gross domestic product (GDP) for the third quarter has cemented expectations for a hold.
At their previous October meeting, Bank of Canada officials signalled that they are satisfied with where interest rates currently sit.
That said, forecasting the direction of Canada’s economy has not been easy.
The Bank of Canada did not publish a forecast for the economy during most of this year, instead offering illustrative scenarios for how inflation and economic growth might evolve.
Governor Tiff Macklem repeatedly said that the central bank needs more clarity on how tariffs from the U.S. would impact the economy.
Canada's current inflation rate, as of October, is an annualized 2.2%. The Bank of Canada’s target for inflation is set at 2%.
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