Canadian borrowers and homeowners are watching closely as the Bank of Canada prepares to deliver its final interest rate decision of 2025 on Wednesday, Dec. 10. While speculation has been swirling for weeks, many financial experts now believe the central bank is likely to hold its lending rate steady.
The overnight rate currently sits at 2.25 per cent after the bank trimmed it in October. This benchmark influences mortgage pricing and borrowing costs across the country. According to Ratehub.ca mortgage expert Penelope Graham, the bank signaled in its Oct. 29 announcement that it was shifting into a holding pattern. “Its governing council clearly indicated they feel the current policy rate level is right to support the economy and temper inflation,” she said, adding that monetary policy alone cannot offset the challenges sparked by ongoing trade disruptions.
True North Mortgage echoed the sentiment, noting that earlier predictions of a further drop to 2.0 or even 1.75 per cent are now unlikely. “A cut this year or in early 2026 is looking less likely,” the company said in a statement.
Not all economists are convinced the door is fully closed. TD Bank economist Maria Solovieva wrote in a weekly report that Canada’s third-quarter GDP growth rebounded sharply despite cooling in household spending and business investment. With the economy tracking close to the Bank of Canada’s forecast—growth just above one per cent through 2026—she said a future rate cut “cannot be fully ruled out,” though GDP would need to cool further for that shift to materialize.
Inflation remains a key hurdle. Canada’s current inflation rate sits at 2.5 per cent, slightly above the central bank’s two per cent target. Graham said the figure “presents a roadblock to any further cuts at this time,” though easing shelter and goods costs, along with the removal of Canadian counter-tariffs, may help restrain price growth.
The labour market is also factoring into the decision. Statistics Canada reported unexpected job growth in November, with the employment rate climbing to 60.9 per cent. Part-time positions made up the bulk of the increase, but health care, social assistance, accommodation, food services and natural resources sectors also expanded.
With mixed signals coming from inflation, GDP and the labour market, analysts say the most likely scenario is a rate hold on Dec. 10. Whether cuts return to the table in 2026 will depend heavily on how these indicators evolve in the months ahead.
For the Bank of Canada’s final decision, visit bankofcanada.ca.