Economists widely expect the Bank of Canada to hold its key rate at 2.25% into 2027
The Bank of Canada looks set to lock its policy rate at 2.25 percent for an extended period, shaping a prolonged low‑yield environment that pension and benefit plans will have to navigate.
According to The Canadian Press, economists widely expect the central bank to hold its benchmark rate at this week’s final decision of 2025, after a year of four quarter‑point cuts that took the rate a full percentage point below where it started the year.
The Canadian Press also reported that markets put the odds of a hold at nearly 93 percent based on LSEG Data & Analytics.
Reuters said all 33 economists in its December 2‑5 poll forecast the overnight rate will stay at 2.25 percent at the December 10 meeting, and a majority—18 of 29—expect no move at least until 2027.
Reuters also reported that inflation sits firmly within the Bank of Canada’s target range and that the economy grew at a better‑than‑expected 2.6 percent annualized last quarter, helped in part by government spending, reducing pressure for further cuts.
Policy‑wise, the central bank has already done most of the heavy lifting.
The Canadian Press noted that the Bank of Canada cut in January, March, September and October, then signalled it was likely comfortable with the current setting unless data deviate sharply from its projections.
Reuters added that the 275 basis points of easing to date rank among the most aggressive cycles in the G10, and that in October the bank effectively called a halt to additional cuts.
“Pulling these strands together, there is now no doubt the bank will stand aside,” said BMO chief economist Douglas Porter in a client note, as reported by The Canadian Press.
In comments cited by Reuters, Porter said that “with the Bank all but signalling that it believes it is done cutting rates, it’s only natural that thoughts are now turning to when it may start going in the other direction,” but he argued it is “far too early for rate-hike talk” given that “the dark cloud of trade uncertainty is still hanging over the economy.”
Forward guidance remains cautious.
The Canadian Press reported that Desjardins deputy chief economist Randall Bartlett expects the Bank of Canada to stay on hold at its December meeting and “throughout 2026,” and said the bank is probably satisfied with how it has guided the economy through the tariff shock after a cumulative half‑point of cuts in the second half of the year.
With the federal budget now passed, he also told The Canadian Press the bank likely has more confidence that fiscal policy can deliver targeted support while monetary policy stays on the sidelines.
On housing, Reuters reported that home sales regained momentum in October, helped by lower borrowing costs, even as national prices are still down about 3.2 percent so far this year.
A separate Reuters survey of analysts pointed to a modest recovery ahead, with prices forecast to rise 1.8 percent on average next year and 3.5 percent in 2027, and most analysts expecting affordability for first‑time buyers to improve over the coming year.
