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RBC Sees Bank of Canada Keeping Policy Rate of 2.25% Unchanged Until End 2026

BY MT Newswires | ECONOMIC | 10/30/25 07:06 AM EDT

07:06 AM EDT, 10/30/2025 (MT Newswires) -- RBC said it thought two consecutive cuts after a six-month pause would solidify the end of the cycle for the Bank of Canada.

Indeed, it took two as the BoC lowered the overnight rate by 25bps to 2.25% on Wednesday to the lower end of the neutral range, noted the bank.

The move was expected, but the language pivot wasn't, noted the bank. The BoC was explicit in noting that "if inflation and economic activity evolve broadly in line with the October projection, Governing Council sees the current policy rate at about the right level to keep inflation close to 2%," strongly suggesting an on-hold base case going forward.

Canada's central bank did keep the door open to further easing if the economy came in materially weaker. Relatively low expectations for activity near-term provide a high bar to further cuts, though, pointed out RBC.

The BoC emphasized that it wasn't best placed to handle the structural transition underway due to trade tensions with the United States and targeted support was needed for the economy, implying fiscal authorities are better suited.

RBC's BoC forecast remains a steady policy rate of 2.25% through the end of 2026.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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