The Bank of Canada has announced its latest decision on the benchmark lending rate, and it’s good news for Canadians. In the final monetary policy update for 2025, the Bank has decided to keep the benchmark lending rate unchanged at 2.25 per cent.
This decision comes as a relief for many Canadians who have been closely following the Bank’s updates and anticipating a change in the lending rate. The Bank’s decision to maintain the current rate is a testament to the stability and strength of the Canadian economy.
The benchmark lending rate is the interest rate at which commercial banks can borrow from the central bank. It is a crucial tool used by the Bank of Canada to control inflation and stimulate economic growth. A lower lending rate encourages borrowing, which in turn stimulates economic activity. On the other hand, a higher lending rate can help control inflation by reducing borrowing and spending.
The Bank’s decision to hold the benchmark lending rate unchanged is a strategic move to maintain the current economic momentum. Despite the ongoing global economic challenges, the Canadian economy has shown resilience and continues to perform well. The Bank’s decision is a vote of confidence in the Canadian economy and its ability to weather any potential storm.
One of the main factors contributing to the Bank’s decision is the steady growth of the Canadian economy. The latest GDP numbers show a growth rate of 2.2 per cent, which is in line with the Bank’s expectations. The Bank believes that this growth rate is sustainable, and keeping the lending rate unchanged will support this growth.
Inflation is another crucial factor that the Bank of Canada considers when making decisions on the lending rate. The latest inflation numbers show a slight increase, with the annual rate reaching 2.5 per cent. However, the Bank believes that this increase is temporary and expects inflation to return to its 2 per cent target in the near future.
The Bank also took into account the global economic situation, which has been uncertain due to various factors such as trade tensions and geopolitical issues. However, the Bank believes that the Canadian economy is well-positioned to navigate through these challenges and maintain its strong performance.
The decision to hold the benchmark lending rate unchanged will have a positive impact on the Canadian housing market. With mortgage rates remaining low, it will continue to be an attractive time for Canadians to enter the housing market. This will further support economic growth and contribute to the overall stability of the economy.
Moreover, the Bank’s decision will also benefit Canadian businesses. With low borrowing costs, businesses can continue to invest in growth and expansion, which will create job opportunities and drive economic activity.
In conclusion, the Bank of Canada’s decision to keep the benchmark lending rate unchanged at 2.25 per cent is a positive sign for the Canadian economy. It reflects the Bank’s confidence in the current economic situation and its commitment to maintaining stability and growth. As we enter a new year, this decision will provide a strong foundation for the Canadian economy to continue its upward trajectory.
