Bank of Canada keeps key interest rate unchanged at 2.25 per cent

The Bank of Canada has decided to hold its key interest rate at 2.25 per cent, a move that economists had largely anticipated as the central bank continues to assess the pace of economic recovery.

This marks the Bank of Canada’s first rate decision of the year, following a pause in interest rate cuts announced in December. Governor Tiff Macklem said economic conditions have developed broadly in line with the bank’s expectations since that pause was put in place.

New economic projections released alongside the decision indicate Canada’s economy showed little growth in the final quarter of last year. The bank attributed the slowdown to weaker consumer spending and ongoing pressure from higher borrowing costs.

However, the outlook suggests modest improvement ahead, with growth expected to strengthen gradually over the next two years. For households and businesses across provinces such as British Columbia and Alberta, the rate hold offers short term stability as they continue to navigate higher mortgage and financing costs.

The central bank has signalled it will continue to monitor inflation trends, labour market conditions, and global economic developments before making any further changes to interest rates.