Bank of Canada Brings Tidings of Comfort But No Joy, Says TD

07:20 AM EST, 12/15/2025 (MT Newswires) -- Overall, last week's events confirm that Canada's economy is holding up well despite global uncertainties, said TD.

This was echoed in the Bank of Canada's interest rate announcement on Wednesday, which brought tidings of comfort, if not exactly joy, noted TD.

Inflation also remains a key focus for the BoC. While some volatility is anticipated in the coming months, the BoC expects underlying inflation to remain steady near 2.5% year over year. The Governing Council believes that the current interest rate is appropriate to keep inflation close to target and to help the economy adapt to ongoing shifts.

Looking ahead, recently robust employment reports have prompted markets to price in the likelihood of one rate hike next year, stated the bank. However, with trade uncertainties persisting and the review of the CUSMA, or USMCA, trade agreement approaching, the BoC is committed to a data-driven approach.

For now, Canadians should expect the policy rate to be settled in for a long winter's nap, unless significant changes in economic indicators warrant a shift.

The key piece of data last week was international trade data for September, which had been delayed by the United States government shutdown. Canada's trade position strengthened notably, moving from a $6.4 billion deficit in August to a $153 million surplus. Exports surged by 6.3% month over month. That is good news, but looking at exports relative to a year ago, most industries are still in the not-so-festive red, added TD.

The latest figures confirm that net trade contributed positively to real gross domestic product growth in Q3 and suggest a potential upward revision to the Q3 GDP figure. While some volatility may remain, the most severe impacts of tariffs appear to be in the rearview, though the future of trade relations will depend on the outcome of the USMCA review.

As Canadians get ready to reflect on 2025, what stands out is the economy's continued resilience despite global uncertainties, according to TD. Interest rates have stabilized at a lower level and trade is recovering. The trajectory will depend on how these trends evolve, but for now, the week brings tidings of cautious comfort in the economy's underlying strength.

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