Bank of Canada Holds Rates as Expected, Says TD

11:02 AM EST, 12/10/2025 (MT Newswires) -- The Bank of Canada held its policy rate at 2.25% on Wednesday, in line with market expectations, said TD.

The opening statement highlighted that while United States tariffs and trade uncertainty continue to weigh on business investment, the Canadian economy has proven to be relatively resilient, noted the bank. However, it noted measures of hiring intentions remain "subdued" despite the recent improvements in the labor market.

The BoC expects that inflation will continue to moderate in the coming months. There was emphasis that there could be some "choppiness" in inflation in the months ahead. Nonetheless, this is expected to be temporary and there was again emphasis that underlying inflation remains "around 2.5%."

Importantly, the release maintained the statement that "[i]f 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% while helping the economy through this period of structural adjustment," stated TD.

A sequence of strong employment reports led to markets repricing the risk of a rate hike from the BoC next year. Dismissing the economy's resilience would be a mistake, however, as the outlook remains challenging and the risks from trade uncertainty remain high, added the bank.

The hold on Wednesday was widely expected and TD maintains the view that the balance of risks to the outlook will have the BoC on hold in the coming months.

Uncertainty remains "sky-high" and with discussions about the renewal of the CUSMA trade agreement set to pick up, along with some delayed data, the bank expects the BoC to maintain its data-dependent approach.

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