Bank of Canada holds its policy rate at 2.25% in January

On January 28, 2026, the Bank of Canada held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. It was the second hold in a row after the cut to 2.25% in October 2025.

Bank of Canada policy rate, %

What the Bank said

• It projects economic growth of 1.1% in 2026 and 1.5% in 2027, as population growth slows and Canada adjusts to US trade policy.
• CPI inflation was 2.4% in December, lifted by base-year effects from last winter’s GST/HST holiday. Core inflation measures eased to around 2.5%.
• Unemployment was 6.8%, and the review of the Canada-US-Mexico Agreement is a key source of uncertainty.
• Governing Council judged the current rate appropriate if the economy evolves as expected, but said it is prepared to respond if the outlook changes.

What it means for Calgary buyers and owners

Variable-rate mortgage payments and prime-based lines of credit do not change after a hold. Fixed rates follow bond yields rather than the policy rate, so they can still move between announcements. If you have a renewal coming up this year, it is worth getting a rate hold early and comparing options. The next scheduled decision is March 18.

The global backdrop

The Bank said the outlook for the global and Canadian economies was little changed from October, but vulnerable to unpredictable US trade policies and geopolitical risks. US growth continues to outpace expectations, supported by business investment and consumer spending, and tariffs are pushing up US inflation, though that effect should fade later in the year. Services and fiscal policy support the euro area, while China’s growth is expected to slow gradually. The Bank expects global growth to average about 3%.

Global financial conditions remain accommodative. A weaker US dollar pushed the Canadian dollar above 72 cents, and oil prices are assumed to be slightly below the October forecast.

Canada: tariffs versus domestic demand

Bank of Canada January 2026 forecast: GDP growth

After a strong third quarter, GDP growth likely stalled in the fourth quarter. Exports continue to be hit by US tariffs, while domestic demand appears to be picking up. Employment has risen in recent months, but relatively few businesses plan to hire. In the Bank’s projection, consumer spending holds up and business investment strengthens gradually, with some support from fiscal policy.

Why the Bank is holding

The Bank said monetary policy is focused on keeping inflation close to the 2% target while helping the economy through a period of structural adjustment. Growth is expected to be modest in the near term as population growth slows and Canada adjusts to US protectionism, and the upcoming review of the Canada-US-Mexico Agreement is a key source of uncertainty. Governing Council judged the current rate appropriate as long as the economy evolves broadly in line with its outlook, while monitoring risks closely.

Inflation close to target

Excluding tax changes, inflation has been slowing since September. The Bank’s preferred core measures eased from 3% in October to about 2.5% in December. Inflation averaged 2.1% in 2025, and the Bank expects it to stay close to 2%, as trade-related cost pressures are offset by excess supply in the economy.