BOC Keeps It Steady at 2.25% While Canada's Economy Stays Strong Even with Trade Drama

Yo, no cap, the Bank of Canada or BOC kept it chill and didn't touch those rates, staying at 2.25% in December. 🎄 They're playing it safe, saying the policy rate's just right to vibe with the economy, even with all those trade drama vibes while keeping inflation on the low-low. 💵

For the second time in a row, they hit pause after earlier slashing rates by 100 basis points. Governor Tiff Macklem said Canada's holding strong 💪 despite all that U.S. tariffs drama.

Key Takeaways

• Rate stayed as expected: Overnight rate chilling at 2.25%, Bank Rate at 2.50%, and deposit rate at 2.20%
• Economic glow-up acknowledged: Q3 GDP came in clutch at 2.6%, but it was mostly a trade mood swing with flat final domestic demand
• Job market popping off: Over 180K jobs added in three months, with unemployment dropping to 6.5% in November
• Inflation on fleek: Headline CPI at 2.2% in October, underlying inflation flexing around 2.5%
• Extended chill mode likely: Current rate’s lit for “lower end of neutral range” to back that structural adjustment
• High uncertainty gang still in the house: BOC ready to vibe check if the outlook switches up, especially about the CUSMA talks

Peep the official BOC statement (December 2025)

The bank pointed out that Canada's strong 2.6% growth in Q3 was mainly from some wild trade numbers, not actual strength. Final domestic demand was a flat line, and they're guessing Q4 might flop as falling net exports likely erase modest glow-ups elsewhere in the economy.

Macklem said there was “clear vibes” to keep rates steady, but spilled some tea on how tricky it is to read the true economic story ‘cause of the rollercoaster trade data and quarterly GDP. He kept things chill about future plans, saying they're taking it one meeting at a time. 🚦

He also threw some shade on recent GDP revamps, saying Canada was vibing better heading into that U.S. trade drama zone. Even with some sectors taking a hit, the average tariff on Canadian goods stays around 6%, so a lot of the economy’s still shipping goods to the U.S. like it’s all good. 🛒

Macklem knows people out there are still feeling the squeeze with affordability. He added that while inflation has cooled, the bank ain't down with letting prices drop because deflation signals a weak vibe and makes people hold onto cash, making the situation worse. 💸

Catch the BOC Press Conference (December 2025)

Market Reactions

Canadian Dollar vs. Major Currencies: 5-min

The CAD was low-key struggling after the announcement, as investors peeped the bank’s comment that rates are “at the lower end of the neutral range,” sounding mad dovish. 🙃

CAD briefly caught some hype but slipped again when Governor Macklem didn't spill any tea on timelines and highlighted the “usual uncertainty” around vibes. His comments on a split council opinion and the possibility of policy tweaking probs left rate cuts on the mood board. 🎨

After the press event, CAD was vibing mid-level as peeps shuffled their positions, making the move seem small. But after the FOMC decision, Loonie didn’t flex on other currencies, except compared to the growing U.S. dollar. 💪©

Market bets saying BOC’s likely to vibe with status quo through the first half of 2026, with only a slight whisper for hikes late next year. Macklem’s cautious chill seemed crafted to keep those vibes in check. ✌️