The Bank of Canada kept its target for the overnight rate at 2.25%, leaving the Bank Rate at 2.5% and the deposit rate at 2.20%. It judged the outlook for the global and Canadian economies to be little changed from the October Monetary Policy Report projection, while flagging heightened vulnerability to unpredictable US trade policies and geopolitical risks. US growth continues to exceed expectations and is projected to remain solid, supported by AI-related investment and consumer spending, while tariffs are pushing up US inflation with effects expected to fade gradually later this year. In the euro area, growth has been supported by services activity and is expected to receive further support from fiscal policy, while China’s GDP growth is forecast to slow gradually as weaker domestic demand offsets export strength; overall, global growth is projected to average about 3% over the horizon. Financial conditions were described as accommodative, with recent US dollar weakness lifting the Canadian dollar above 72 cents, broadly in line with levels seen since the October MPR, and oil prices fluctuating in response to geopolitical events.
Bank of Canada 2026-01-28
Bank of Canada holds policy rate at 2.25% with outlook little changed but exposed to US trade and geopolitical risks
The Bank of Canada maintained its overnight rate target at 2.25%, citing an unchanged economic outlook but highlighting vulnerabilities from US trade policies and geopolitical risks. Global growth is projected to average 3%, with US growth exceeding expectations and euro area growth supported by services and fiscal policy.