Governing Council’s latest hold left the next move wide open for March
The Bank of Canada’s January 28 summary of deliberations puts mortgage professionals on notice that the next rate move – up or down – remains “unusually difficult” to call, even as the policy rate stayed at 2.25%.
With the next decision due March 18, the document underlines just how little guidance the Governing Council feel able to give on timing or direction.
Rather than signaling a clear path to cuts, the council emphasized that heightened uncertainty has broadened the range of outcomes that could force a rethink of its outlook.
The summary said it is “unusually difficult to effectively assign weights and probabilities to the various risks surrounding the outlook,” pointing to geopolitical shocks, the Canada-United States-Mexico Agreement (CUSMA) review and Canada’s adjustment to US tariffs.
Council members agreed the economy remains in excess supply and projected modest GDP growth of 1.1% in 2026 and 1.5% in 2027, with inflation close to the 2% target.
They noted that “geopolitical tensions and US trade policy remains unpredictable, and uncertainty about how the Canadian economy would adjust remains elevated,” concluding they need to “maintain optionality in setting monetary policy.”
BoC struggles to map next move
The summary reaffirms that the 2.25% policy rate sits on the stimulative side of the Bank’s neutral range and would stay there “conditional on the economy evolving in line with their outlook.”
At the same time, members warned that costs from reconfigured supply chains, the CUSMA review and sector‑specific tariff shocks could either dampen growth or push prices higher.
In a year‑end speech, governor Tiff Macklem already described 2.25% as “at about the right level” to support modest growth while keeping inflation near target, adding that “inflationary pressures continue to be contained despite added costs related to the reconfiguration of trade,” even as the economy remains in “a period of structural adjustment,” he said.
Statistics Canada reported the jobless rate fell to 6.5% in January, its lowest since 2024, but the decline was driven by fewer Canadians seeking work—fueling expectations that the Bank of Canada will hold rates steady through 2026.https://t.co/wgGt9nK589
— Canadian Mortgage Professional Magazine (@CMPmagazine) February 6, 2026
Mortgage market read a plateau, not a pivot
Economists broadly expect the overnight rate to hold near 2.25% through 2026, arguing that a soft but not collapsing economy calls for stability rather than new stimulus or a quick return to hikes.
Some warned that failure of CUSMA negotiations or a deeper trade shock could still pull the Bank deeper into stimulative territory, while a successful deal and firmer growth might justify a gradual move back toward a 2.75% neutral setting.
Ontario brokers critical of the January hold warned that leaving rates unchanged risks deepening housing softness and keeping renewal pain elevated for existing owners, even as national metrics look contained, they said.
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