Bank of Canada leaves rates on hold, as expected

(Sharecast News) - The Bank of Canada left interest rates on hold on Wednesday, as widely expected. The policy rate was kept at 2.25% for the second meeting in a row as the Bank said the outlook for the global and Canadian economies is little changed relative to its projection in the October monetary policy report.

"However, the outlook is vulnerable to unpredictable US trade policies and geopolitical risks." It said.

"Economic growth in the United States continues to outpace expectations and is projected to remain solid, driven by AI-related investment and consumer spending. Tariffs are pushing up US inflation, although their effect is expected to fade gradually later this year.

"In the euro area, growth has been supported by activity in service sectors and will get additional support from fiscal policy. China's GDP growth is expected to slow gradually, as weakening domestic demand offsets strength in exports. Overall, the Bank expects global growth to average about 3% over the projection horizon."

For Canada, the Bank expects growth of 1.1% this year and 1.5% in 2027, broadly in line with the October projection. It said the upcoming review of the Canada-US-Mexico Agreement was a key source of uncertainty.