The Bank of Canada is keeping its target for the overnight lending rate at 2.25%. This decision, announced on Wednesday, January 28, 2026, marks the second consecutive time the central bank has held the rate steady. For homeowners and prospective buyers in Saint John, this move offers a continued period of stability regarding borrowing costs.

Why the Bank Held the Rate

Analysts widely expected this pause. While the economy showed growth in the third quarter of 2025, projections for the final quarter suggest a flatlining economy. A major factor influencing this decision is the impact of exports to the United States, which are currently dragging on growth due to ongoing tariffs. This is particularly relevant for New Brunswick’s export-heavy economy.

According to the Canadian Real Estate Association (CREA), the Bank also noted that while employment numbers have picked up recently, the unemployment rate remains high, especially among younger workers. Furthermore, business surveys indicate that few companies plan to increase their workforce in the immediate future.

Inflation and Future Outlook

You will be glad to know that Consumer Price Index (CPI) inflation is slowing and trending closer to the Bank’s 2% target. However, the cost of living challenges persist. The Bank highlights that inflation for specific items, such as food services and rent, remains well above long-term averages.

Looking ahead, the Bank projects economic growth of just 1.1% in 2026. Headwinds include slower population growth and adjustments to U.S. protectionism. The upcoming review of the Canada-US-Mexico (CUSMA) agreement also adds a layer of uncertainty to the economic forecast.

The Bank maintains that the current policy rate of 2.25% fits the current economic climate but stands ready to respond if the outlook changes due to unpredictable trade policies.

Frequently Asked Questions

What is the current Bank of Canada policy rate?

The Bank of Canada maintained its policy rate at 2.25% on January 28, 2026.

When is the next interest rate announcement?

The Bank of Canada will make its next scheduled interest rate announcement on March 18, 2026.

Why didn’t the interest rate go down?

The Bank held the rate to assess ongoing economic factors, including U.S. tariffs, the CUSMA review, and persistent inflation in sectors like rent and food services.