The Bank of Canada held its overnight lending rate at 2.25% again Wednesday amid ongoing trade tensions with the U.S. and economic uncertainty.

Bank of Canada Governor Tiff Macklem cited uncertainty surrounding the reopening of the Canada-U.S.-Mexico Agreement as a key factor in the decision. Commercial real estate industry reaction to the hold was somewhat mixed, while leading economists said they were not surprised but that Macklem’s comments showed the BoC’s concerns about economic uncertainty and Canada-U.S. trade tensions.

“Today’s decision is not a surprise, in light of inflation ticking upward,” said Mark Fieder, head of Avison Young’s Canadian business. “I anticipate we will see a continued hold on the overnight rate for the foreseeable future, taking us toward the later part of 2026.”

The CRE sector will clearly benefit when the BoC decides to introduce cuts again, he added.

“Canadian bonds are expected to experience more stability in 2026, coming out of a volatile 2025 – particularly the Government of Canada’s five-year bond, which drives lenders’ decisions around setting fixed mortgage rates,” he said. “With uncertainty still in play around trade policies, we remain keenly focused on how economic indicators influence the Bank of Canada’s decisions. Our 2026 outlook for commercial real estate, as revealed in a recent poll of Avison Young experts, remains quite positive.”

Michael Constantino, CEO of Webull Canada, said the hold signals a fundamental shift from monetary stimulus to strategic pause.

“After aggressive easing throughout 2025, policymakers now view rates as appropriately calibrated,” he said. “It reflects deep uncertainty around U.S. trade policy and CUSMA renegotiation at a time when Canadian business sentiment remains fragile. For investors, this creates a more complex environment than the straightforward tailwinds of last year’s rate cuts.

“The pause removes a key driver that powered financials and rate-sensitive sectors higher, while persistent trade uncertainty keeps volatility elevated across export-heavy industrials and materials.”

Prime Minister Mark Carney’s government continues to negotiate a new version of CUSMA with little sign of progress.

“Bottom line is, we agreed that the current policy rate is appropriate if the economy evolves broadly in line with the outlook we just published,” BoC Governor Tiff Macklem told reporters in Ottawa.

BoC leaders reached a consensus that it’s very difficult to predict either the direction or timing of the next move in the central bank’s policy rate, he added.

As expected, the U.S. Federal Reserve also held its key rate again Wednesday. In rare comments about the Fed, Macklem said the threat to the U.S. central bank’s independence has contributed to the Canadian economic uncertainty.

U.S. President Donald Trump has voiced numerous complaints about Fed Chairman Jerome Powell, whose term expires in May. Many questions have been raised about the Fed’s future independence as Trump prepares to appoint a new Fed leader amid his ongoing anger with its rate decisions.

“Look, why did I make a point of commenting on Chairman Powell and the U.S. Fed?” The simple reason is the U.S. Federal Reserve is the biggest and most important central bank in the world,” said Macklem. “And, we all need it to work well. A loss of independence of the Fed would affect us all, and for Canada, our financial markets are particularly integrated with the United States, so it would particularly affect us.

“It’s hard to predict exactly what this would look like, but keeping the Fed operating independently, it’s good for Americans, it’s good for Canadians.”

Central banks’ independence give them the space to take difficult decisions that benefit a country’s economy and citizens over the medium term, he added.

Macklem said heightened geopolitical risks and unpredictable U.S. policy, with threats to Canada and other countries, have addded to the Canadian economic uncertainty.

“We are monitoring those risks very closely, and if a new shock comes along, or an accumulation of evidence that materially changes our outlook, we’re prepared to respond,” he said.

Pictured: Bank of Canada Governor Tiff Macklem

Photo: University of Toronto