This post was originally published on this site.
Economists from National Bank, Desjardins, Royal Bank and the Bank of Montreal are widely expecting the Bank of Canada to leave its interest rate unchanged at 2.25 per cent in this morning’s announcement.
It’s predicted to be the second consecutive hold after policymakers said in October 2025 that rates are at “about the right level.”
While the first two-thirds of 2025 showed weakness in the job market, the BoC said in last month’s statement that there were signs of improvement. Although December unemployment rose 0.3 percentage points to 6.8 per cent, that should not invalidate the central bank’s previous position, National Bank economists Taylor Schleich and Ethan Currie said in a note.
Although December’s headline CPI came in higher than expected, that number was distorted by last year’s GST/HST holiday, says BMO economist Benjamin Reitzes. The BoC is likely to place greater weight on core CPI, which largely excludes tax changes and showed most core measures decelerating, he adds.
Despite the consensus that the BoC will hold today, economists’ projections last December for the latter part of 2026 were more divided. Capital Group’s outlook suggests the BoC “will resist a cut amid muted inflation, but softness in the middle of 2026 may force their hand.” National Bank economists, by contrast, say “the worst is behind the Canadian economy” and expect rate hikes to kick in next fall.