Here’s a brief summary of the latest Bank of Canada (BoC) policy decision and economic outlook as we begin 2026:
The Bank of Canada has decided to hold its key policy interest rate unchanged at 2.25 % in its January 28 announcement, the first of the year. This decision was widely expected by economists and follows a similar hold at the Bank’s final 2025 meeting. The Governing Council judged that the current rate “remains appropriate”, provided the economy evolves broadly in line with its projections.
The Bank reiterated that domestic growth continues to be affected by U.S. trade uncertainty and tariffs which have disrupted Canadian exports and overall economic momentum. After some strength earlier in 2025, GDP growth likely stalled late in the year and the labor market—though improved in recent months—still shows elevated unemployment.
Inflation remains close to target. Headline CPI rose slightly in December (partly due to base-year GST/HST effects), but the Bank’s preferred core inflation measures have been easing and are consistent with its goal of keeping inflation near 2%.
Implications for Markets & Borrowers:
• Mortgage rates and other borrowing costs are influenced by the BoC’s policy rate: keeping it unchanged supports stability in borrowing costs for consumers and businesses for the near term.
• Fixed rates remain relatively stable following a period of uncertainty in December.
• The Bank emphasized that if economic conditions change materially—either through faster inflation or weaker growth—it stands ready to respond with policy adjustments.
Please let us know if you’d like a more detailed breakdown of how this outlook might affect mortgage rates or planning for the year ahead.
Get In Touch
If you’re thinking about a new mortgage or renewing your current one, let’s chat and explore your options. With over 50 years of combined experience, we are here to help you navigate the mortgage landscape. Connect with a 4Front broker today.
