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Bank of Canada Expected to Hold Interest Rate at 5%

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  Published in Stocks and Investing on Friday, February 13th 2026 at 7:00 GMT by The Globe and Mail
      Locales: CANADA, UNITED STATES, UNITED KINGDOM

Toronto, ON - February 13th, 2026 - The Bank of Canada is widely anticipated to maintain its current key interest rate of 5% following its meeting today, a decision reflecting a delicate balancing act between containing lingering inflation and navigating a complex global economic landscape. While significant progress has been made in curbing inflation over the past two years, economists caution that premature rate cuts could reignite inflationary pressures and further destabilize the Canadian economy.

The Bank of Canada embarked on a series of aggressive interest rate hikes beginning in early 2024, ultimately reaching 5% in an effort to cool down a rapidly overheating economy and bring inflation back to its 2% target. Recent data suggests these measures are proving effective, with inflation trending downwards from its peak. However, the descent isn't complete, and the Bank remains vigilant against a resurgence of price increases.

"The current situation is a bit like driving with your foot hovering over the brake," explains Dr. Evelyn Reed, Chief Economist at Sterling Financial. "We've slowed the car down considerably - inflation is coming down - but we don't want to lift our foot completely and risk it speeding up again. Holding rates steady allows the Bank to assess the impact of previous hikes and observe how the economy responds without introducing new stimulus."

However, the decision to hold isn't simply about domestic inflation. A significant weight on the Bank's deliberations is the increasing volatility stemming from global geopolitical events. The protracted conflict in Eastern Europe continues to disrupt energy markets and supply chains, while escalating tensions in the Middle East add another layer of uncertainty. These factors contribute to volatile commodity prices and can exert upward pressure on inflation, even as domestic demand cools.

"The global picture is muddy," notes Robert Chen, Senior Analyst at Global Investment Partners. "While Canada is showing signs of economic moderation, we're still very much at the mercy of external shocks. A sudden spike in oil prices due to geopolitical instability could easily derail the progress made on inflation."

Adding to the complexity is the ongoing North American earnings season. This week, major Canadian corporations like Shopify, Nutrien, and Loblaw are releasing their quarterly results. These reports aren't just about corporate profitability; they offer crucial insights into consumer spending habits and overall economic health. Investors are meticulously analyzing these figures, looking for clues about the strength of the Canadian consumer and the prospects for future growth.

Shopify's results, in particular, are being closely watched as a bellwether for the e-commerce sector and its impact on retail spending. Nutrien, a major player in the fertilizer industry, will provide valuable information about agricultural commodity prices and food inflation. Loblaw, Canada's largest grocery retailer, will offer a direct read on consumer purchasing power and spending patterns on essential goods.

Beyond Canada's borders, the upcoming release of U.S. inflation data will be critical. As the Canadian and U.S. economies are deeply intertwined, inflationary trends in the United States often have a ripple effect in Canada. Higher-than-expected U.S. inflation could prompt the Bank of Canada to reconsider its dovish stance and potentially delay any future rate cuts.

The consensus amongst economists is that the Bank of Canada will likely hold rates steady for at least the first half of 2026, perhaps even longer, depending on how global events unfold. While the possibility of rate cuts later in the year hasn't been ruled out, it's contingent on sustained progress in bringing inflation under control and a stabilization of the international geopolitical landscape.

The Bank of Canada's upcoming announcement is more than just a monetary policy decision; it's a reflection of a cautious approach to navigating a world fraught with uncertainty. The central bank is walking a tightrope, attempting to balance the need to contain inflation with the risks of stifling economic growth amidst a turbulent global environment. Investors and consumers alike will be watching closely to see which way the Bank leans.