C.D. Howe Institute Urges Bank of Canada to Hold Overnight Rate at 2.25% for Year

Canada's most influential think tank, the C.D. Howe Institute, is urging the Bank of Canada to maintain its target for the overnight rate at 2.25 percent for its upcoming December 10 announcement and throughout the next year. The Institute’s Monetary Policy Council (MPC) states this stability is crucial.

Economic Headwinds and Local Resilience

The MPC's recommendation, detailed by C.D. Howe Institute President and CEO William B.P. Robson, follows the Bank of Canada's previous reduction of the overnight rate to 2.25% in October. The central bank aims to keep inflation within its 1 to 3 percent range, with a 2 percent target. National economic data points to a challenging environment, with Canada's annual inflation rate cooling to 2.2% in October, yet underlying measures remain somewhat elevated. The Canadian economy also saw a 1.6% contraction in Q2 GDP and a soft labour market.

Despite these national headwinds, Calgary's economic outlook remains robust. City of Calgary forecasts project a healthy 2.9% real GDP growth for the city, outperforming provincial and national averages, driven by strong domestic demand and infrastructure investment. Calgary’s headline inflation for 2025 has been revised down to 2.2%. Economic analysts, including TD Economics' Andrew Hencic, largely anticipate the Bank of Canada to hold the overnight rate at 2.25% into 2026, signaling a high bar for further monetary policy adjustments. The next Bank of Canada interest rate announcement is December 10.