Central bank governor: 'I'm not going to put our policy on a timeline'
The Bank of Canada left its policy rate at 2.25% and kept mortgage borrowers guessing about the next phase of its cutting cycle.
Governor Tiff Macklem framed the decision as a balancing act between supporting a “structural transition” and keeping inflation near target.
“In the current situation, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment,” he said.
The Bank of Canada has left interest rates unchanged in its last decision of the year, holding the policy rate steady amid lingering uncertainty over inflation and the economic outlook.https://t.co/eFZLWNM7ZO
— Canadian Mortgage Professional Magazine (@CMPmagazine) December 10, 2025
Economy held up but 2026 growth seen only moderate
Despite steep US tariffs on steel, aluminum, autos and lumber, Macklem said “the economy [was] proving resilient overall” even as those sectors have been “hit…hard” and investment has been weighed down by policy uncertainty.
Revised Statistics Canada data showed the economy has been “healthier than we previously thought” before the trade conflict, with both demand and capacity stronger heading into this year, he said.
After a 1.8% GDP drop in the second quarter, output rebounded by 2.6% in the third – a swing Macklem described as “largely reflect[ing] volatility in trade” rather than a durable upswing in domestic demand.
Final domestic demand has been flat but is expected to resume, with overall GDP growth projected to be weak in the fourth quarter “before picking up in 2026,” he said.
The labour market has posted “solid gains” for three straight months, pulling the unemployment rate down to 6.5% in November, although hiring intentions across the economy remains muted.
Inflation near target keeps door open to future cuts
Inflation has evolved “largely as expected,” with headline CPI at 2.2% in October and core measures in the 2.5% to 3% range.
Macklem warned that a one-off GST/HST holiday from a year earlier would make headline inflation “choppy” in the near term, but said slack in the economy should “roughly offset cost pressures” from trade reconfiguration, keeping inflation close to target.
The Bank judged that a rate “at the lower end of the neutral range was appropriate to provide some support for the economy” while containing price pressures.
At the same time, it stressed that “if a new shock or an accumulation of evidence materially change[d] the outlook, we were prepared to respond” – language that left the possibility of further easing on the table in 2026 if growth or inflation underperformed.
"I'm not going to put our policy on a timeline," Macklem said, responding to a question about the timing of a potential rate hike next year.
"What markets can count on is we're going to take our decisions one at a time, based on the best available information."
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