The Bank of Canada has announced its decision to keep its benchmark lending rate unchanged at 2.25 per cent in its final monetary policy update for 2025. This move comes as a relief to many Canadians who were anticipating a possible increase in interest rates.
The decision was made after careful consideration of various economic factors, including inflation, employment, and global market conditions. The Bank of Canada’s mandate is to maintain price stability and promote economic growth, and this decision is a testament to their commitment to achieving these goals.
Inflation has been a major concern for the Bank of Canada in recent years, with the annual rate reaching a high of 3.7 per cent in 2024. However, the latest data shows that inflation has stabilized at around 2 per cent, which is within the Bank’s target range. This is a positive sign for the economy, as it indicates that prices are not rising at an alarming rate.
The labor market has also shown signs of improvement, with the unemployment rate dropping to 5.5 per cent in 2025. This is the lowest it has been since the start of the pandemic, and it is a clear indication that the economy is recovering. The Bank of Canada’s decision to keep interest rates unchanged will help to support this recovery by encouraging businesses to invest and create more jobs.
The global market conditions have also played a significant role in the Bank’s decision. The ongoing trade tensions between major economies have created uncertainty and volatility in the market. By keeping interest rates steady, the Bank is providing a sense of stability and predictability for businesses and consumers alike.
The Bank of Canada’s decision to maintain the benchmark lending rate at 2.25 per cent is a positive move for the Canadian economy. It will help to keep borrowing costs low, making it easier for individuals and businesses to access credit. This, in turn, will stimulate economic activity and promote growth.
Moreover, this decision is also good news for homeowners with variable rate mortgages. With interest rates remaining unchanged, they can continue to enjoy low mortgage payments, providing them with more disposable income to spend or save.
The Bank of Canada’s monetary policy update also included a statement from Governor Tiff Macklem, who emphasized the importance of remaining vigilant in the face of potential risks to the economy. He stated, “While we are encouraged by the recent economic data, we must remain cautious and prepared to adjust our policies if necessary.”
This statement highlights the Bank’s commitment to closely monitoring economic developments and taking necessary actions to support the economy. It also reassures Canadians that the Bank is prepared to act if there are any significant changes in the economic landscape.
In conclusion, the Bank of Canada’s decision to keep its benchmark lending rate unchanged at 2.25 per cent is a positive move for the Canadian economy. It reflects the Bank’s confidence in the current state of the economy and its commitment to promoting growth and stability. As we enter a new year, this decision provides a sense of optimism and stability for Canadians, and we can look forward to a prosperous 2026.
