The Bank of Canada has announced its final monetary policy update for 2025, and it’s good news for Canadians. The benchmark lending rate will remain unchanged at 2.25 per cent, a decision that will have a positive impact on the economy and the financial well-being of individuals and businesses across the country.
This announcement comes after careful consideration and analysis of economic data and trends. The Bank of Canada’s mandate is to maintain price stability and promote economic growth, and it’s clear that this decision aligns with those goals.
The benchmark lending rate, also known as the overnight rate, is the interest rate at which major financial institutions borrow and lend money to each other. It has a significant impact on the overall cost of borrowing for individuals and businesses, as it influences mortgage rates, credit card rates, and other loans.
By keeping the benchmark lending rate unchanged, the Bank of Canada is sending a message of stability and confidence in the Canadian economy. This decision will also have a positive effect on the housing market, as it will keep mortgage rates low and make homeownership more affordable for many Canadians.
For businesses, this announcement means that the cost of borrowing remains steady, allowing them to make strategic investments and expand their operations. It also signals a stable and supportive environment for businesses to thrive and contribute to the country’s economic growth.
This is the second consecutive announcement of an unchanged benchmark lending rate by the Bank of Canada. In its previous update in October, the bank stated that the economy was showing signs of recovery and projected strong growth for 2026. The decision to maintain the current rate is a reflection of the bank’s confidence in the economy’s continued growth and stability.
The bank also closely monitors inflation rates, and with the current rate of 2.25 per cent, it is within the bank’s target range of 1-3 per cent. This means that the cost of goods and services will remain relatively stable, providing a sense of financial security for Canadians.
Moreover, the bank also recognizes the ongoing challenges posed by the COVID-19 pandemic and its impact on the economy. However, the bank’s decision to keep the benchmark lending rate unchanged shows its commitment to supporting the country’s economic recovery.
In its announcement, the bank also reiterated its commitment to continue purchasing government bonds at a rate of $2 billion per week. This measure, known as quantitative easing, was implemented in response to the pandemic to support the flow of credit and maintain liquidity in the financial system.
The Bank of Canada’s decision to hold the benchmark lending rate unchanged at 2.25 per cent is a positive step towards economic recovery and growth. It provides stability and confidence to individuals and businesses and reflects the bank’s commitment to fulfilling its mandate.
As we approach the end of 2025, this announcement is a reminder of the resilience and strength of the Canadian economy. Despite the challenges, the country continues to move forward, and with the support of the Bank of Canada, we can look forward to a prosperous future.
