The Bank of Canada left its key interest rate unchanged on Wednesday as the economy continues to show resilience in the face of tariff pressures.
The policy rate remains at 2.25 per cent after the Bank of Canada lowered it by a quarter point in October, signalling at the time that the rate could be at the right level to keep inflation in check while supporting the economy.
Bank of Canada governor Tiff Macklem said in prepared remarks Wednesday that inflationary pressures remain contained despite some added costs related to tariffs.
He said that while recent GDP and employment data has surprised to the upside, it hasn't changed the governing council's overall outlook on growth.
"While information since the last decision has affected the near-term dynamics of GDP growth, it has not changed our view that GDP will expand at a moderate pace in 2026."
He said uncertainty about U.S. trade policy continues to weigh on business investment and that the upcoming review of the Canada-United States-Mexico Agreement will add further pressure.
Despite the headwinds, the Canadian economy showed a surprising 2.6 per cent annualized jump in the third quarter, while the unemployment rate dropped 0.4 percentage points to 6.5 per cent in November.
The changes reflect swings in trade patterns that are making it difficult to get a clear picture of the future, said Macklem.
"The volatility we’re seeing in trade and quarterly GDP make it more difficult to assess the underlying momentum of the economy."
Macklem warned that uncertainty remains high and the range of possible outcomes is wider than usual as the economy goes through a fundamental transformation.
"This is more than a cyclical downturn — it’s a structural transition."
The Bank of Canada lowered interest rates by one percentage point this year over a series of moves.
This report by The Canadian Press was first published Dec. 10, 2025.
