Bank of Canada Set to Update Interest Rates and Economic Forecasts
The Bank of Canada announced on January 28, 2026, that it will maintain its key interest rate at 2.25 percent. This decision was anticipated by a slight majority of economists. The announcement is significant as it comes during a period of economic uncertainty in Canada.
Interest Rate and Economic Context
The central bank’s policy interest rate remains unchanged at 2.25 percent. Economists widely expected this hold, given the current landscape. The decision is critical as it coincides with upcoming reviews of the Canada-U.S.-Mexico trade agreement, which could impact the economy further.
Inflation Outlook
Governor Tiff Macklem indicated back in December that the Bank of Canada expects inflation to stay around its target of 2 percent for the year. However, he noted that the bank is “prepared to respond” should economic conditions shift dramatically.
- Current interest rate: 2.25%
- Inflation target: 2%
- Trade agreement review: Scheduled for later this year
Business Sentiment Insights
A recent business outlook survey released by the Bank of Canada provided insights into the economic climate. It reported that overall business sentiment was subdued at the end of last year but showed improvement compared to the lows experienced in the second quarter of 2025.
These findings highlight the mixed feelings among businesses as they navigate forward. As the Bank of Canada continues to assess the economic environment, interest rate decisions will remain integral to its monetary policy strategy.
