Canada's Economy: Steady Rates, Uncertain Future

The Bank of Canada decided to keep interest rates steady at 2. 25% in late January 2026. This decision was widely expected, given the current economic climate. The bank's outlook for both the global and Canadian economies hasn't changed much since their last forecast in October. Inflation is expected to stay near the 2% target over the next few years. The bank's statement emphasized that the current interest rate is still appropriate. They also mentioned they're ready to act if the economic situation changes. Canada's economic growth is projected to be slow in the near term. This is due to a slowing population growth and adjustments to US protectionism. The GDP growth for 2025 was revised upwards to 1. 7%, showing the economy was stronger than previously thought.Looking ahead, GDP growth is expected to be 1. 1% in 2026 and 1. 5% in 2027. Inflation is projected to be 2. 0% in 2026, slightly lower than previously expected. The bank also noted that the US economy is growing faster than expected, while the Eurozone and China are seeing more modest growth. The Canadian dollar strengthened slightly following the announcement. This was likely due to the bank's revised GDP figures and the market's reaction to the interest rate decision. The bank's statement also highlighted the uncertainty surrounding US trade policies and geopolitical risks. These factors could significantly impact Canada's economic outlook. Despite this uncertainty, the bank remains committed to keeping inflation near the 2% target.