BoC Poised To Hold Rates As Economy Shows Signs Of Stabilisation
- Better growth, stronger hiring support stance - Policymakers expected to remain ready to respond - Statement likely to sound more upbeat on activity - Announcement due at 14:45 GMT/09:45 ET - Press conference set for 15:30 GMT/10:30 ET
The Bank of Canada’s Governing Council is widely expected to stay on the sidelines at its final meeting of the year on Wednesday, having previously signalled that monetary policy was likely near the limits of what it could do to support the economy in the current environment.
Economists broadly expect the Ottawa-based central bank to keep its policy rate unchanged at 2.25%, effectively ending its current easing cycle.
TD Securities said the policy statement should “strike a more upbeat tone” following the sharp rebound in Q3 GDP and further labour-market strength. At the same time, guidance may highlight recent progress and repeat the bank’s pledge to maintain price stability.
Evolving outlook
Since the October meeting, economic activity has shown moderate improvement.
The economy expanded 0.6% q/q (2.6% annualised) in Q3, reversing the 1.6% contraction recorded in Q2.
Last week’s Labour Force Survey reported a surprise 54,000 rise in November employment, far exceeding expectations for a 2,500 decline. Job gains spanned 11 of 16 categories, led by healthcare.
Business-sector productivity also rebounded in Q3, rising 0.9% after a 1.0% fall in Q2, marking the sixth increase in the past eight quarters.
BoC Governor Tiff Macklem, testifying on the recent policy announcement and Monetary Policy Report, said US tariffs and persistent trade uncertainty had weighed on the Canadian economy. As a result, staff projected only modest growth of around 0.75% through the second half of the year, before a pickup in 2026.
Headline CPI slowed to 2.2% y/y in October, down 0.2 percentage points from September. Statistics Canada said the deceleration was largely driven by gasoline prices, which fell 9.4% y/y compared with a 4.1% decline in September. Excluding gasoline, CPI rose 2.6% y/y, unchanged from the prior month.
Analysts noted that upward momentum in the BoC’s preferred core inflation measures appeared to have stalled.
Source: Bank of Canada Oct Monetary Policy Report
Neutral stance
National Bank of Canada economists said they expect policymakers to maintain the view that the current stance is appropriate while reiterating that they remain “prepared to respond” if the outlook shifts.
TD Securities added that the December statement “should have more of an upbeat tone” given the evolution of data since 29 October. Experts added that the forward-looking section may emphasise that the economy is showing some progress while repeating that monetary policy has limited capacity to smooth the adjustment underway. “We do not expect any directional bias, with the bank instead stating again that they are committed to price stability,” the firm wrote.
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- Better growth, stronger hiring support stance
- Policymakers expected to remain ready to respond
- Statement likely to sound more upbeat on activity
- Announcement due at 14:45 GMT/09:45 ET
- Press conference set for 15:30 GMT/10:30 ET
By Harry Daniels
LiveSquawk News
@HarryDaniels71
08 December 2025 | 18:00 GMT
The Bank of Canada’s Governing Council is widely expected to stay on the sidelines at its final meeting of the year on Wednesday, having previously signalled that monetary policy was likely near the limits of what it could do to support the economy in the current environment.
Economists broadly expect the Ottawa-based central bank to keep its policy rate unchanged at 2.25%, effectively ending its current easing cycle.
TD Securities said the policy statement should “strike a more upbeat tone” following the sharp rebound in Q3 GDP and further labour-market strength. At the same time, guidance may highlight recent progress and repeat the bank’s pledge to maintain price stability.
Since the October meeting, economic activity has shown moderate improvement.
The economy expanded 0.6% q/q (2.6% annualised) in Q3, reversing the 1.6% contraction recorded in Q2.
Last week’s Labour Force Survey reported a surprise 54,000 rise in November employment, far exceeding expectations for a 2,500 decline. Job gains spanned 11 of 16 categories, led by healthcare.
Business-sector productivity also rebounded in Q3, rising 0.9% after a 1.0% fall in Q2, marking the sixth increase in the past eight quarters.
BoC Governor Tiff Macklem, testifying on the recent policy announcement and Monetary Policy Report, said US tariffs and persistent trade uncertainty had weighed on the Canadian economy. As a result, staff projected only modest growth of around 0.75% through the second half of the year, before a pickup in 2026.
Headline CPI slowed to 2.2% y/y in October, down 0.2 percentage points from September. Statistics Canada said the deceleration was largely driven by gasoline prices, which fell 9.4% y/y compared with a 4.1% decline in September. Excluding gasoline, CPI rose 2.6% y/y, unchanged from the prior month.
Analysts noted that upward momentum in the BoC’s preferred core inflation measures appeared to have stalled.
National Bank of Canada economists said they expect policymakers to maintain the view that the current stance is appropriate while reiterating that they remain “prepared to respond” if the outlook shifts.
TD Securities added that the December statement “should have more of an upbeat tone” given the evolution of data since 29 October. Experts added that the forward-looking section may emphasise that the economy is showing some progress while repeating that monetary policy has limited capacity to smooth the adjustment underway. “We do not expect any directional bias, with the bank instead stating again that they are committed to price stability,” the firm wrote.