Rates Aren’t Falling: Here’s What I’d Do With My TFSA

The Bank of Canada just refused to blink. On Jan. 28, 2026, it held the policy rate at 2.25%, and it highlighted that the outlook remains vulnerable to U.S. trade policy surprises and other global risks. That matters for Tax Free Savings Account (TFSA) investors as “higher for longer” changes the game. Borrowing stays pricey, consumers stay cautious, and the market rewards businesses that can keep earning money without needing cheap financing.

If rates aren’t falling, I would treat my TFSA like a shock absorber, not a slot machine. I want steady cash generation, reasonable valuations, and businesses that can hold up when the economy slows. I also want fewer holdings that depend on rate cuts to look good. This is the year to be a little boring on purpose.

What I’d do

The simple move: build a core that can survive two very different outcomes. If the economy holds up, you still want upside. If it wobbles, you want ballast. That means leaning into quality businesses with pricing power, plus a dash of cash flow you can reinvest when markets throw a tantrum. A TFSA works best when you let compounding breathe, not when you chase whatever is trending.

The second part of the move is psychological, and it matters. Stop treating every rate headline like a call to action. High rates can stick around longer than anyone expects, and constant tinkering usually turns into fees, taxes outside the TFSA, and stress. Pick a small set of holdings you can hold through ugly months, and let time do the heavy lifting.

The third part is a simple screen: favour companies that sell essentials, manage debt well, and do not need capital markets to fund the plan. When rates stay high, weak balance sheets feel heavier, and strong business models feel lighter. That is the kind of protection that actually works.

NWC

The North West Company (TSX: NWC) fits this “rates aren’t falling” mindset because it sells the basics. It runs 229 stores across Canada, Alaska, the South Pacific, and the Caribbean under banners like Northern and NorthMart. When money gets tight, people still buy groceries. They may delay a phone upgrade, but they do not stop eating. That demand profile can make the business steadier than many Canadian retailers.

The past year also showed why the story is not as simple as “staples are safe.” In its third quarter ended Oct. 31, 2025, North West said sales slipped 0.5% to $634.3 million, and same-store sales fell 1.7%. It also pointed to a real, very specific headwind in Canada: reduced funding tied to Inuit Child First and Jordan’s Principle programs weighed on Canadian same-store sales. That kind of pressure can linger, and it reminds you that even essential retailers can face local shocks.

Looking ahead, I would watch two things: margins and capital returns. North West has been leaning on its “Next 100” initiative to improve assortment, procurement, and productivity, and it credited that work for margin gains and lower expenses. It also renewed its normal course issuer bid, allowing it to repurchase up to about 10% of the public float over the next 12 months. Buybacks plus a dividend can be a nice one-two punch inside a TFSA, as long as the underlying business stays healthy. The risk is that consumer strain or policy changes in key communities keep sales soft, or that inflation and supply chain costs flare up again.

Bottom line

So, could NWC be a buy for others in a TFSA when rates aren’t falling? It could be, if you want a steadier retailer with essential demand, real profitability, and shareholder-friendly moves like dividends and buybacks. Plus a solid dividend, which could bring in ample income even with $7,000.

It could also be a pass if you need fast growth or if you worry that regional funding changes and cost pressures will keep sales choppy. The protection angle is the point: in a sticky-rate Canada, a business that can defend margins and keep paying you can do a lot of calming work in a TFSA.