The decision comes as economic indicators continue to show more strength than many analysts expected, significantly reducing the likelihood of another rate cut in the near term.
Heading into today’s announcement, markets were already leaning heavily toward a hold—with LSEG data showing a 93.5% probability of no change as of Tuesday afternoon. Economists argued that the combination of firm employment numbers, resilient GDP performance, and inflation remaining within the Bank’s target range made additional easing unlikely.
BMO chief economist Douglas Porter noted last week that economic data has been “so firmly planted on the strong side” that some market observers are even speculating the next move could eventually be a hike—though likely not anytime soon.
The labour market has been a key factor in the Bank’s decision. Canada recorded a third straight month of surprise job gains, with 181,000 net new positions added since September. Meanwhile, third-quarter GDP growth exceeded expectations, and inflation edged down to 2.2% in October, from 2.4%, keeping it comfortably within the Bank’s 1–3% target.
CIBC chief economist Avery Shenfeld said he expects the Bank’s accompanying statement to acknowledge both the “economic uncertainties and some weak spots” found within Q3 GDP, while also recognizing the ongoing improvement in employment conditions.
Shenfeld added that the Bank will likely reiterate that interest rates are “now at an appropriate level,” reinforcing expectations of an extended pause unless a meaningful economic shift emerges.