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The Bank of Canada elected to hold its key interest rate steady at 2.25 per cent on Wednesday.
The decision comes after a disappointing labour market report for February, with the Canadian economy losing 84,000 jobs. Headline CPI for that month was below the BoC's two per cent target at 1.8 per cent.
"We continue to expect the Canadian economy to grow modestly as it adjusts to US tariffs and trade policy uncertainty, but recent data suggest that near-term economic growth will be weaker than anticipated in January," a press release announcing the decision reads. "The labour market remains soft. Employment gains in the fourth quarter of 2025 were largely reversed in the first two months of 2026, and the unemployment rate rose to 6.7% in February. Looking through the volatility, recent data also suggest ongoing weakness in exports. It’s too early to assess the impact of the conflict in the Middle East on growth in Canada."
Markets have not yet reached consensus on the future direction for the Bank of Canada, with many pricing in rate hikes later in the year. In the wake of February's job losses, Russell Investments' Head of Canadian Strategy BeiChen Lin argued that we could see the BoC cut interest rates as early as its next meeting in April.
Source/More Details: Wealth Professional
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