Governor Tiff Macklem will shortly face questions from reporters, giving markets a clearer sense of how the central bank is thinking. His comments follow the widely expected decision to keep the policy rate on hold at 2.25%.
This section below was published at 14:45 GMT to cover the Bank of Canada’s policy announcements and the initial market reaction.
The Bank of Canada (BoC) kept its policy rate on hold at 2.25% on Wednesday, as expected. Attention now shifts to Governor Tiff Macklem’s press conference at 15:30 GMT, where markets will be listening closely for more colour on today’s decision and what might come next.
BoC policy statement key highlights
The Bank of Canada keeps the 2026 growth forecast at 1.1% and sees 1.5% growth in 2027 (vs 1.6% in the October Monetary Policy Report).
Says 2025 growth was most likely 1.7% (up from 1.2% in Oct).
Inflation is to average 2.0% in 2026 (vs. 2.1% forecast in Oct.), 2.1% in 2027 (unchanged).
Annualised Q4 growth is seen at 0.0% (vs 1.0% in Oct); Q1 2026 is predicted to be 1.8%.
The Q4 output gap is estimated in the range of -1.5% to -0.5%, unchanged from October.
Potential output growth in 2026 is seen at 1.0% (unchanged) and 1.0% in 2027 (vs 1.3%).
Potential output growth in 2025 was revised up to 2.3% from 1.6% in Oct., mainly due to historical GDP revisions.
The nominal neutral interest rate is assumed to be in a range of 2.25% to 3.25%, unchanged from October.
Market reaction
The Canadian Dollar (CAD) trades with acceptable gains on Wednesday, motivating USD/CAD to add to Tuesday’s losses and flirt with the area of 2025 lows around 1.3540 in the wake of the BoC’s interest rate decision.
Canadian Dollar Price Today
The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.46% | 0.28% | 0.23% | -0.29% | -0.02% | 0.04% | 0.57% | |
| EUR | -0.46% | -0.18% | -0.24% | -0.75% | -0.48% | -0.40% | 0.11% | |
| GBP | -0.28% | 0.18% | -0.04% | -0.53% | -0.30% | -0.24% | 0.29% | |
| JPY | -0.23% | 0.24% | 0.04% | -0.51% | -0.24% | -0.19% | 0.34% | |
| CAD | 0.29% | 0.75% | 0.53% | 0.51% | 0.27% | 0.33% | 0.86% | |
| AUD | 0.02% | 0.48% | 0.30% | 0.24% | -0.27% | 0.06% | 0.58% | |
| NZD | -0.04% | 0.40% | 0.24% | 0.19% | -0.33% | -0.06% | 0.52% | |
| CHF | -0.57% | -0.11% | -0.29% | -0.34% | -0.86% | -0.58% | -0.52% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).
This section below was published as a preview of the Bank of Canada’s (BoC) monetary policy announcements at 10:00 GMT.
- The Bank of Canada is expected to keep its interest rate at 2.25%.
- The Canadian Dollar remains firm, dragging USD/CAD to yearly lows.
- Markets pencil in around 10 bps of hiking by the BoC this year.
The Bank of Canada (BoC) is widely expected to leave its benchmark rate unchanged at 2.25% at Wednesday’s meeting, extending the pause it signalled back in December.
At its last decision, the central bank made clear it sees policy as roughly where it needs to be to keep inflation close to the 2% target, so long as the economy behaves as expected. Still, officials were keen to underline that they’re not locked in and stand ready to respond if the outlook deteriorates or inflation risks re-emerge.
On inflation, the message remains cautiously reassuring. Headline CPI is projected to hover near the target as spare capacity in the economy helps offset cost pressures tied to trade reconfiguration. Even so, underlying inflation is still running a little hot, suggesting the disinflation process isn’t complete.
The growth picture is also uneven: Q4 GDP is expected to come in soft, with firmer domestic demand likely to be outweighed by a drag from net exports. That follows a surprisingly strong Q3, which the BoC has largely put down to trade-related volatility rather than a genuine pickup in momentum. The labour market offers a slightly brighter note, with early signs of improvement reinforcing the Bank’s wait-and-see approach.
Inflation, however, remains the key watchpoint after the headline CPI edged up to 2.4% YoY in December, while core inflation eased to 2.8% YoY. The bank’s preferred measures, CPI-Common, Trimmed and Median, also ticked lower, but at 2.8%, 2.7% and 2.5% respectively, they remain comfortably above target.
Previewing the BoC’s interest rate decision, analysts at the National Bank of Canada (NBC) noted, “The Bank of Canada is set to leave its overnight target unchanged at 2.25%, a decision widely expected by forecasters and OIS markets. This would mark the second consecutive hold after policymakers declared in October that policy is at ‘about the right level’ to keep inflation near target and support the economy’s transition”.
When will the BoC release its monetary policy decision, and how could it affect USD/CAD?
The Bank of Canada will announce its policy decision on Wednesday at 14:45 GMT alongside the Monetary Policy Report (MPR), followed by a press conference with Governor Tiff Macklem at 15:30 GMT.
Markets anticipate the central bank will maintain its current stance, with a projected tightening of approximately 10 basis points by the end of 2026.
Pablo Piovano, Senior Analyst at FXStreet, points out that the CAD has been appreciating steadily against the Greenback since its yearly lows past the 1.3900 barrier recorded earlier in the month. He adds: “Indeed, USD/CAD has recently broken below the 1.3700 support to hit new 2026 lows, exposing a potential test of the December 2025 floor at 1.3642 (December 26). South from here sits the weekly trought at 1.3575 (July 23), ahead of the July 2025 base at 1.3556 (July 3) and the 2025 bottom at 1.3538 (June 16).”
From here, Piovano says a return of bullish momentum could prompt USD/CAD to initially reclaim its key 200-day SMA at 1.3833 prior to the 2026 ceiling at 1.3928 (January 16). Up from here comes the key 1.4000 threshold seconded by the November top at 1.4140 (November 5).
“Momentum favours extra declines,” he adds, noting that the Relative Strength Index (RSI) approaches the 33 level and the Average Directional Index (ADX) near 27 is indicative of a pretty firm trend.
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