Bank of Canada holds key interest rate steady at 2.25% in soft economy

By Canadian Press on January 28, 2026.

OTTAWA — The Bank of Canada left its benchmark interest rate unchanged as inflation remains stable and the economy adapts to U.S. tariffs.

Economists widely expected the central bank’s decision to hold its policy rate at 2.25 per cent today.

Bank of Canada governor Tiff Macklem says the economy has evolved broadly in line with the central bank’s projections since hitting pause on its interest rate easing cycle in December.

Fresh forecasts released today show the Bank of Canada expects the economy stalled in the final quarter of 2025 but is expected to recover gradually over the next two years.

The central bank also sees inflation holding broadly around its two per cent target over the horizon but forecasters at the bank also warn the outlook is risky, thanks in part to the upcoming review of the Canada-U.S.-Mexico agreement later this year.

Macklem says the Bank of Canada believes the policy rate is still at the right level but the uncertainty dogging the economy makes it hard to predict the timing or direction of future policy rate decisions.

This report by The Canadian Press was first published Jan. 28, 2026.

Craig Lord, The Canadian Press