Bank of Canada says path for rates hard to predict with increased risks to outlook

Bank of Canada Governor Tiff Macklem is seen during a news conference in Ottawa on Wednesday, Jan. 28, 2026. THE CANADIAN PRESS/Adrian Wyld

The Bank of Canada’s governing council says it’s difficult to see where interest rates are headed as it faces increased risks to its economic outlook due to geopolitical turbulence and trade uncertainty.

In the summary of deliberations from its interest rate decision last month, the council noted that with heightened uncertainty, the range of possible outcomes that could materially change its outlook has broadened.

“Moreover, in the context of an unpredictable environment with little historical precedent, it was unusually difficult to effectively assign weights and probabilities to the various risks surrounding the outlook,” the council noted in the summary published Wednesday.

“Members therefore agreed that it was difficult to predict the timing and direction of the next change in the policy rate.”

The Bank of Canada kept its policy interest rate on hold at 2.25 per cent last month.

In making the decision, the central bank said it would continue to monitor risks closely and was prepared to respond if the economic outlook changed.

The council said the economy had evolved largely as anticipated since its October monetary policy report, but noted risks to its outlook were up.

It identified three broad areas including recent geopolitical events, the review of the trade agreement between Canada, the United States and Mexico, and the economy’s adjustment to trade disruptions.

“Recent geopolitical events — including in Venezuela, Iran and Greenland — and threats to the independence of the Federal Reserve had made the world more turbulent and caused a resurgence in uncertainty,” the central bank said.

The Bank of Canada’s next scheduled interest rate decision is set for March 18.

This report by The Canadian Press was first published Feb. 11, 2026.

Craig Wong, The Canadian Press