Bank of Canada keeps its key interest rate unchanged at 2.25% 

December 10, 2025

RED FM News Desk

Bank of Canada has annuonced on Wednesday that it is keeping its key interest rate unchanged. The central bank said in its last interest rate decision of 2025 that it is holding its overnight rate at 2.25%, with the Bank Rate at 2.5% and deposit rate at 2.20%.  

The Bank of Canada has made several cuts to its key interest rate this year and has reduced the interest rate by a total of 1%. The most recent cut was in October, when the central bank lowered its interest rate by 0.25%.  

According to prepared remarks from Bank of Canada governor Tiff Macklem, inflationary pressures are still being kept in check despite the additional costs tied to tariffs. The governor said that this policy rate is the right level to keep inflation aligned with the 2% target while also aiding the economy. Macklem, however, cautioned that uncertainty remains high and that the range for potential outcomes is broader than normal. 

Main objective of the bank is to keep inflation rate close to bank’s target of 2%. CPI inflation has been close to 2% for more than a year. In October, due to decline in gasoline prices and slower increase in food prices, CPI inflation slowed to 2.2%. Bank says that underlying inflation is still around 2.5% and in the near term, CPI inflation is expected to be higher because of the effects of last year’s GST/HST holiday on the prices of some goods and services. The Bank believes that, even with the ups and downs, the existing economic slack should offset the cost impacts of trade reconfiguration, allowing CPI inflation to stay close to its 2% goal. 

Bank of Canada says that current policy rate is right level for keeping inflation near 2% and supporting the economy during this phase of structural adjustments as long as inflation and economic conditions progress roughly as outlined in October forecast. However, uncertainty remains high and if the outlook changes, the bank will respond accordingly.