Bank of Canada holds key interest rate as officials monitor economic uncertainty

The Bank of Canada has left its benchmark interest rate unchanged at 2.25 per cent in its final policy decision of the year, signalling that borrowing costs remain at a level the central bank views as appropriate for maintaining price stability.

Governor Tiff Macklem said major global economies continue to show signs of resilience, even as uncertainty persists and the United States maintains a protectionist approach to trade. He noted that the current policy rate is helping keep inflation near the bank’s two per cent target, suggesting no immediate need to raise or cut interest rates.

Macklem added that any move toward rate reductions would only be considered if Canada faces a significant economic shock or if new data clearly shows the economy weakening. The comments come as households in cities such as Surrey, Calgary and Edmonton continue to grapple with higher borrowing costs and slower income growth.

The central bank expects household spending to pick up in the fourth quarter, though overall growth could remain soft due to a projected decline in net exports. Economists say that could have implications for provincial budgets and local labour markets heading into the new year.