The Bank of Canada held its overnight rate target at 2.25% at its final policy meeting of 2025, in a decision announced on 10 December. The decision follows an easing cycle that brought the benchmark rate down from 5% since June 2024.
The Governing Council said that, if inflation and economic activity evolve broadly in line with its October projection, it sees the current policy rate at about the right level to keep inflation close to 2%, adding that it is prepared to respond if the outlook changes. The statement repeats the assessment first made in October that the current level of borrowing costs is broadly appropriate for the Canadian economy's present circumstances.
EASING SINCE JUNE 2024
The Bank of Canada's cuts since June 2024 moved the overnight rate from 5% down to the lower end of what the Bank regards as the neutral range.
The Bank of Canada and the United States Federal Reserve both announced decisions on 10 December. The Fed lowered its target range by 25 basis points to 3.50%–3.75%, while the Bank of Canada held at 2.25%.
NEXT DECISION
The Bank of Canada's next policy announcement is not scheduled until early 2026. The Bank has not provided explicit numerical thresholds to guide expectations about future adjustments.
Governor Tiff Macklem and the Governing Council conducted multiple rate reductions before arriving at the current level.
Bank news that matters, every weekday.
Follow The Global Banker on LinkedIn