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UBS Sees Bank of Canada to Hold Rates Next Week

BY MT Newswires | ECONOMIC | 01/23/26 07:17 AM EST

07:17 AM EST, 01/23/2026 (MT Newswires) -- The upcoming Bank of Canada meeting on Wednesday will take place against a backdrop of softening Canadian data, with the labor market still showing signs of slack, said UBS.

This weaker domestic momentum has led markets to scale back expectations for year-end tightening, reinforcing the view that the BoC is likely to remain cautious and keep rates

on hold at 2.25%, wrote the bank in a note to clients. It will be important to see whether this meeting opens the door to further rate cuts or if the current stance remains unchanged.

In contrast, United States data has strengthened, with resilient gross domestic product growth and robust retail sales highlighting a still-solid U.S. consumer and reducing the urgency for Federal Reserve easing, stated UBS.

With macroeconomic divergence now favoring the US dollar (USD), relative policy differentials point to a more balanced or slightly higher USD/CAD, added the bank. That said, a USD/CAD move to 1.390 would mark a top for UBS in the pairing.

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

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