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CIBC Economics

The Bank of Canada left interest rates unchanged at 2.25% at the December announcement.
That&#8217;s the level that they judged to be consistent with spurring a recovery in economic growth and keeping inflation close to target.
However, they did express a willingness to react to surprises in the economic data, which means that they could hike or cut interest rates if the data comes in stronger or weaker than their forecast.
CIBC expects the overnight rate to remain at 2.25% for 2026.
In terms of the forecast going forward, while we expect a stall in growth in Q4, we expect a recovery in 2026 on the renewal of the CUSMA trade agreement.
That will help improve business and consumer confidence, resulting in more business investment and a further drop in the unemployment rate.
And at the same time, past rate cuts will still be working their way through activity and will help to support housing market activity.
Specifically in the second half of next year.

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What can we make of the Bank of Canada’s decision to hold interest rates at 2.25%?

What can we make of the Bank of Canada’s decision to hold interest rates at 2.25%?

CIBC Economics

Katherine Judge

Senior economist

CIBC