Summary of the BoC event: Economic resilience and data-dependent stance
Oleh Pablo Piovano
Tanggal Diterbitkan: 11 Dec 2025 | Tanggal Dimodifikasi: 11 Dec 2025
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As widely anticipated, the Bank of Canada (BoC) kept its benchmark interest rate at 2.25% at its event on Wednesday.
As widely anticipated, the Bank of Canada (BoC) kept its benchmark interest rate at 2.25% at its event on Wednesday.
In his press conference, Governor Tiff Macklem said the Canadian economy had shown surprising resilience despite US tariffs, helped in part by recent Statistics Canada revisions that suggested growth had been stronger than previously thought before sanctions took effect. He noted that inflationary pressures remained contained and reiterated the view that GDP would expand at a moderate pace in 2026, with inflation staying close to the 2% target. A temporary uptick in prices was expected in the near term due to last year’s tax holiday, though he stressed that the federal budget was not adding significant additional inflationary pressure and that its eventual impact would depend on the speed and effectiveness of implementation.
Macklem argued that keeping the policy rate near the lower end of the neutral range continued to provide appropriate support for the economy, while emphasising that decisions would be taken one at a time based on incoming data. He also acknowledged the challenge faced by Statistics Canada in measuring economic activity accurately.
Senior Deputy Governor Carolyn Rogers added that the Bank did not want to see prices falling and highlighted a better balance in the housing market, saying another surge in house prices was not expected.
Bank of Canada FAQs
The Bank of Canada (BoC), based in Ottawa, is the institution that sets interest rates and manages monetary policy for Canada. It does so at eight scheduled meetings a year and ad hoc emergency meetings that are held as required. The BoC primary mandate is to maintain price stability, which means keeping inflation at between 1-3%. Its main tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Canadian Dollar (CAD) and vice versa. Other tools used include quantitative easing and tightening.
In extreme situations, the Bank of Canada can enact a policy tool called Quantitative Easing. QE is the process by which the BoC prints Canadian Dollars for the purpose of buying assets – usually government or corporate bonds – from financial institutions. QE usually results in a weaker CAD. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The Bank of Canada used the measure during the Great Financial Crisis of 2009-11 when credit froze after banks lost faith in each other’s ability to repay debts.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the Bank of Canada purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the BoC stops buying more assets, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Canadian Dollar.
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