OTTAWA — The Bank of Canada held its benchmark interest rate at 2.25 per cent on Friday, signalling that its easing cycle had drawn to a close as the domestic economy showed renewed strength. The decision matched expectations among economists at the country's major lenders.

Governor Tiff Macklem said the central bank judged current policy to be appropriately positioned, pointing to resilient household spending and a labour market that had stabilised through the autumn. He cautioned that inflation remained above the bank's 2 per cent target and warranted continued vigilance.

The hold followed signals from the bank's October statement, in which policymakers expressed growing confidence in the domestic economy. The move reflected a shift from the aggressive rate cuts that defined much of 2024 and 2025, when the bank sought to support a weakening economy amid trade uncertainty with the United States.

Markets had largely priced in the decision, and the Canadian dollar held steady against the US dollar following the announcement. Economists at RBC and TD Bank said they expected the rate to remain unchanged into early 2027 unless inflation data deteriorated sharply.

The bank's accompanying Monetary Policy Report revised its growth forecast upward for the fourth quarter, while flagging risks from global trade frictions and softness in the housing market.