What is Canada's monetary policy stance?

The Bank held at 2.25% on September 2, the seventh consecutive hold since the 25 bps cut on October 29, 2025, leaving the overnight rate at the floor of the neutral range. Governing Council said “the upside risks to inflation have increased, while new tariffs make growth prospects more uncertain,” and that it “is prepared to adjust monetary policy as needed.” The next decision, on October 28, comes with a new Monetary Policy Report.

The BoC-Fed policy gap stands at -175 bps, 25 bps wider than in August. The Fed raised its target range to 3.75 to 4.00% on September 16, its first change since a cut in December 2025, while the BoC held at 2.25% for a seventh straight decision.

The 2-year GoC yield closed at 3.27% on October 1, 102 bps above the 2.25% overnight target: a bond market leaning toward a higher policy rate. Before this September the gap had not been that wide since October 2022, during the hiking cycle; it was 17 bps on October 30, 2025, the day after the Bank's last cut. The yield reached 3.40% on September 23, its highest close since July 2024.

Repos rose $18.4 billion to $65.9 billion in the two weeks to September 30, nearly all of the $18.6 billion rise in total assets. Government of Canada bonds are still the largest asset, at $135.6 billion of $242.6 billion in total, about 56%, and have held near that level since a $9.0 billion step down in the week to September 2.

Settlement balances rose $20.4 billion to $83.4 billion in the two weeks to September 30, above the $50 to 70 billion operating range that held them at $63.1 billion on September 16. The Canadian Overnight Repo Rate Average, a measure of overnight funding costs, has been 3 to 6 bps above the 2.25% target every day since September 1, after sitting exactly on target in late August.