Bank of Canada Appears To Suggest There's "At Least a Slightly Lower Bar" For Further Rate Cuts, says Desjardins

02:25 PM EST, 02/11/2026 (MT Newswires) -- "Conflicting" economic data and "uncertainty" surrounding CUSMA, a free trade agreement between Canada, the United States, and Mexico, have translated into an "extremely clouded" outlook for interest rates, and as a result, the latest Summary of Deliberations from Bank of Canada made clear that its Governing Council wants to "maintain optionality" in setting monetary policy, noted Royce Mendes at Desjardins on Wednesday.

In practice, Mendes said, that phrasing around optionality, which was not included in any previous communications, appears to suggest there's "at least a slightly lower bar" for further rate cuts.

Mendes noted the BoC's release went on to once again underscore the highly conditional nature of the forward guidance about the current level of interest rates being appropriate. "Given the elevated level of uncertainty with which central bankers are contending, policymakers appear more willing than previously assumed to ease monetary conditions, should the outlook for the economy or inflation change enough," he said, before adding: "This text is seemingly in contrast to Governor Macklem's more hawkish speech from last week."

Mendes said while the Desjardins base case still assumes the BoC won't reduce interest rates any further, he added "there's now more scope for upcoming data and trade headlines to change that forecast."

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