The Bank of Canada (BoC) is widely expected to maintain its benchmark interest rate at 2.25% at its meeting on Wednesday. That would follow two consecutive quarter-point rate cuts in September and October.
Indeed, the central bank trimmed its benchmark rate by 25 basis points in late October, exactly what everyone was expecting.
Furthermore, policymakers signalled they’re pretty comfortable with where rates are now: low enough to support the economy as it adjusts to the fallout from the US-driven trade tensions, but still tight enough to keep inflation hovering around target.
The issue of inflation continues to persist: Headline CPI deflated to 2.2% YoY in October, while the core CPI climbed to 2.9%. The BoC’s preferred measures, Common, Trimmed, and Median CPI, eased a tad, although they remain comfortably above the target at 2.7%, 3.0%, and 2.9%, respectively.
Previewing the BoC’s interest rate decision, analysts at the National Bank of Canada (NBC) noted, “The Bank of Canada is set to leave its policy rate unchanged at 2.25%, after declaring in October that it is ‘at about the right level’ to keep inflation near target and help the economy through a structural adjustment.”
When will the BoC release its monetary policy decision, and how could it affect USD/CAD?
The Bank of Canada will announce its policy decision on Wednesday at 14:45 GMT, followed by a press conference with Governor Tiff Macklem at 15:30 GMT.
Markets anticipate the central bank to maintain its current stance, with a projected tightening of approximately 33 basis points by the end of 2026.
Pablo Piovano, Senior Analyst at FXStreet, points out that the CAD has been appreciating steadily against the Greenback since the November lows north of 1.4100, sending USD/CAD back to the 1.3800 neighbourhood. He also notes that the technical setup still leans toward further losses if spot keeps the trade below its key 200-day SMA at 1.3904.
From here, Piovano says a return of bullish momentum could send USD/CAD up to test the November high at 1.4140 (November 5), and if that breaks, the next target would be the April ceiling at 1.4414 (April 1).
On the other hand, he highlights initial support at the December base of 1.3799 (December 8), seconded by the September floor at 1.3726 (September 17) and the July valley at 1.3556 (July 3).
“Momentum favours extra declines,” he adds, noting that the Relative Strength Index (RSI) is hovering below the 36 level and the Average Directional Index (ADX) above 26, which hints that the current trend is gathering steam at a firm pace.
Economic Indicator
BoC Interest Rate Decision
The Bank of Canada (BoC) announces its interest rate decision at the end of its eight scheduled meetings per year. If the BoC believes inflation will be above target (hawkish), it will raise interest rates in order to bring it down. This is bullish for the CAD since higher interest rates attract greater inflows of foreign capital. Likewise, if the BoC sees inflation falling below target (dovish) it will lower interest rates in order to give the Canadian economy a boost in the hope inflation will rise back up. This is bearish for CAD since it detracts from foreign capital flowing into the country.
Next release: Wed Dec 10, 2025 14:45
Frequency: Irregular
Consensus: 2.25%
Previous: 2.25%
Source: Bank of Canada
Economic Indicator
BoC Press Conference
After Bank of Canada (BoC) meetings and the release of the Monetary Policy Report, the BoC Governor and Senior Deputy Governor hold a press conference at which they field questions from the media. The press conference has two parts – first a prepared statement is read out, then the conference is open to questions from the press. Hawkish comments tend to boost the Canadian Dollar (CAD), while a dovish message tends to weaken it.
Next release: Wed Dec 10, 2025 15:30
Frequency: Irregular
Consensus: –
Previous: –
Source: Bank of Canada