The Bank of Canada should hold its benchmark interest rate steady at 3.25 per cent at its upcoming January meeting, giving policymakers time to digest U.S. President Donald Trump’s vision for Canada-U.S. trade policy.

That’s the view from Scotiabank’s vice-president and head of capital markets economics, and Chartered Professional Accountants of Canada.

Trump has not backed away from Feb. 1 as a start date for blanket 25 per cent tariffs on imports from Canada and Mexico. At the same time, he has ordered federal agencies to study trade policies and trade deficits, and begin consultations on the U.S.-Mexico-Canada Agreement, which is due for review next year.

On Tuesday, Canada’s Industry Minister François-Philippe Champagne said the government must “move from a defensive position to offensive.” Prime Minister Justin Trudeau says he is in favour of imposing "matching" retaliatory tariffs on the United States.

Derek Holt, Scotiabank’s vice-president and head of capital markets economics, says Canada’s central bank “should take a breather and hold next week.” The Bank of Canada's next rate decision is scheduled for Jan. 29.

“I know one thing for sure: I wouldn’t cut at this point while leaving all options open going forward,” he wrote in a research note.

CPA Canada chief economist David-Alexandre Brassard says the evolving dynamic between Canada and its largest trading partner must be closely studied by the Bank.

“The central bank will need to continue cutting rates this year, but the speed of these cuts will largely depend on the trade relationship with the U.S., which remains a key factor influencing both inflation risk and the broader economy,” Brassard wrote in a news release on Wednesday.

“The Bank of Canada has already been easing rates, and the economy and labour market are gradually stabilizing, but demographic shifts are no longer driving growth.”

In 2024, Canada’s central bank cut its benchmark rate by 175 basis points over five consecutive decisions. Statistics Canada data released Tuesday showed the annual inflation rate slowed to 1.8 per cent in December, after a 1.9 per cent reading in November.

“I don’t believe that the Bank should cut, but they may well take the easy route in what’s priced,” Holt wrote.

According to Reuters, markets are betting there's an 81 per cent chance of a 25-basis-point cut next week. CIBC economist Andrew Grantham and BMO Capital Markets chief economist Douglas Porter are calling for the Bank to lower its key rate.

"I'm expecting 25 basis points to come at this next meeting," BMO chief investment officer Sadiq Adatia told Yahoo Finance Canada on Tuesday.