‘Data for Business’ is an effort of the Langley Chamber, in partnership with the Canadian Chamber’s Business Data Lab, to bring our members reports, stats, and analysis on economic and business data to help inform business and investment decisions. Read our latest update below:

At its most recent meeting on December 10, the Bank of Canada decided to keep its key interest rate at 2.25% as it “waits-and-sees” how the economy performs against current headwinds.

In holding the policy rate at 2.25%, the Bank of Canada said global conditions remain mixed: the U.S. economy is showing strong consumer spending and AI-driven investment, Europe’s service sector is proving resilient, and China’s weaker domestic demand continues to weigh on growth. The Bank noted that Canada’s own GDP growth in the third quarter was stronger than expected while underlying domestic demand was flat and likely to remain soft in the near term.
The Bank also pointed to inflation trends as a key factor. It reported that CPI inflation has been near the 2% target for more than a year, slowing to 2.2% in October, even as core inflation remains slightly higher. With labour markets showing modest improvement but hiring intentions still subdued, the Bank said ongoing economic slack should help keep inflation close to target. Based on these conditions, the Bank stated that the current rate “is about the right level” to maintain price stability, while emphasizing that uncertainty remains high and that it is prepared to adjust if needed.

Comment:

Even with the recent run of encouraging economic data, the Bank of Canada is still unsure about how durable the Canadian economy really is. The Bank is signaling it may be done lowering interest rates as it waits on the sidelines to see if that recent strength persists. Domestic conditions are still sluggish and resilience in some parts of the economy will need to work harder to offset continued weakness in trade-exposed sectors. We continue to expect the Bank to stay in a wait-and-see mode to assess whether these positive trends will hold.  – Canadian Chamber of Commerce