BoC Press Conference: Policy Rate Announcement – December 2025

Good morning. I’m pleased to be here with Senior Deputy Governor Carolyn Rogers to discuss today’s monetary policy decision. Today, Governing Council maintained the policy interest rate at 2.25%. We have three main messages. First, steep US tariffs on steel, aluminum, autos and lumber have hit these sectors hard, and uncertainty about US trade policy is weighing on business investment more broadly. But so far, the economy is proving resilient overall. Second, inflationary pressures continue to be contained despite added costs related to the reconfiguration of trade. Total CPI inflation has been close to the 2% target for more than a year now, and we expect it to remain near the target. Third, in the current situation, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment. Nevertheless, uncertainty remains high and the range of possible outcomes is wider than usual. If the outlook changes, we are prepared to respond. BoC's Gov. Macklem: Canadian economy is proving resilient overall despite US tariffs. BoC's Gov. Macklem: We agreed that a policy rate at the lower end of the neutral range was appropriate to provide some support for the economy. BoC's Gov. Macklem: Our view is still that GDP will expand at moderate pace in 2026 and that inflation will remain close to target. BOC: REITERATES THAT IF OUTLOOK CHANGES, IT IS PREPARED TO RESPOND

The Bank of Canada today held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. Major economies around the world continue to show resilience to US trade protectionism, but uncertainty is still high. In the United States, economic growth is being supported by strong consumption and a surge in AI investment. The US government shutdown caused volatility in quarterly growth and delayed the release of some key economic data. Tariffs are causing some upward pressure on US inflation. In the euro area, economic growth has been stronger than expected, with the services sector showing particular resilience. In China, soft domestic demand, including more weakness in the housing market, is weighing on growth. Global financial conditions, oil prices, and the Canadian dollar are all roughly unchanged since the Bank’s October Monetary Policy Report (MPR). Canada’s economy grew by a surprisingly strong 2.6% in the third quarter, even as final domestic demand was flat. The increase in GDP largely reflected volatility in trade. The Bank expects final domestic demand will grow in the fourth quarter, but with an anticipated decline in net exports, GDP will likely be weak. Growth is forecast to pick up in 2026, although uncertainty remains high and large swings in trade may continue to cause quarterl BoC Rate Statement: Underlying inflation is still around 2.5%. BoC Rate Statement: Q4 GDP growth likely to be weak. Final domestic demand will grow in Q4 but will be offset by a decline in net exports. BoC Rate Statement: Canadian labor market is showing some signs of improvement. BoC Rate Statement: Q4 GDP growth likely to be weak; final domestic demand will grow in Q4 but will be offset by a decline in net exports.

BoC's Gov. Macklem: Improvement in the labour market is encouraging. BoC's Gov. Macklem: Businesses are careful about hiring and investment plans. MACKLEM SAYS RECENT JOBS DATA HASN'T CHANGED BOC'S ECONOMIC OUTLOOK BoC's Gov. Macklem: The markets can count on us taking decisions one at a time. BoC's Gov. Macklem declines comment on markets pricing in Fall 2026 hikes.

BoC's Senior Dep. Gov. Rogers: What we don't want is prices coming down. BoC's Senior Dep. Gov. Rogers: BoC sees better balance in the housing market. BoC's Senior Dep. Gov. Rogers: We don't expect another surge in house prices.

SWISS GOVT: REDUCTION IN U.S ADDITIONAL TARIFFS TO ENTER INTO FORCE RETROACTIVELY Swiss government: With the US tariff ceiling of 15%, trade-weighted US tariffs on Swiss products will fall by around 10% on average. Swiss Gov't: Sectoral tariffs on steel, cars, aluminium and copper remain in place. Reduction in US additional tariffs to enter into force retroactively With the entry into force of the new US customs regulations retroactively from 14 November 2025, the applicable US tariffs on Swiss goods will be significantly reduced. The USA will apply an across-the-board tariff ceiling of 15% on imports from Switzerland, replacing the previous additional tariff of 39%. The existing exemptions from US additional tariffs – including pharmaceuticals, certain chemicals, gold and coffee – remain in force unchanged. In addition, based on the joint statement, the US is to lift the general additional tariff on further Swiss export products, including aircraft, certain aviation-related parts, rubber products, cosmetics and generic drugs. The list will be published in the US Federal Register. Switzerland is seeking further exemptions. Products that were subject to a tariff rate of more than 15% before 2 April 2025 will once again be subject to their original tariff rate. The sectoral US additional tariffs under Section 232, for example on steel, aluminium, cars and copper, also remain unchanged. For ongoing Section 232 investigations concerning pharmaceuticals and semiconductors, it was agreed in the joint statement that any additional sectoral tariffs imposed on Switzerland will not exceed 15%. SWISS GOVT: THIS APPLIES RETROACTIVELY FROM 14 NOVEMBER 2025