{"id":543285,"date":"2026-03-17T23:10:14","date_gmt":"2026-03-17T23:10:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/543285\/"},"modified":"2026-03-17T23:10:14","modified_gmt":"2026-03-17T23:10:14","slug":"iran-war-is-a-dark-cloud-over-bank-of-canada-and-the-spring-fiscal-update-national","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/543285\/","title":{"rendered":"Iran war is \u2018a dark cloud\u2019 over Bank of Canada and the spring fiscal update – National"},"content":{"rendered":"

The Bank of Canada<\/a> is set to update interest rates on Wednesday as the Iran<\/a> war brings a dark cloud over the Canadian economy and as Ottawa prepares to release a fiscal update sometime this spring.<\/p>\n

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Oil price spikes<\/a> globally have quickly led to higher gas prices for consumers<\/a>, and economists expect inflation to tick up in the coming months. This means just about everything else is about to get more expensive for consumers and businesses alike.<\/p>\n

\u201cWhether it\u2019s uncertainty or actual smoke, there\u2019s a dark cloud hanging over the global economy thanks to the Iran war,\u201d said Clay Jarvis, a mortgage expert at NerdWallet Canada, in a note.<\/p>\n

\u201cIt\u2019s fair to wonder if a rate cut would even move the needle for consumers and businesses; the current economic\/political climate doesn\u2019t feel all that hopeful.\u201d<\/p>\n

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The Bank of Canada has a mandate \u201cto promote the economic and financial welfare of Canada.\u201d<\/p>\n

To do this, one of its key goals is to maintain price stability by keeping the annual inflation<\/a> rate between two and three per cent.<\/p>\n

Other economic gauges the Bank monitors closely include the perceived strength of the job market<\/a> and the rate at which the economy is expanding, as measured by gross domestic product (GDP)<\/a>.<\/p>\n

To help achieve its mandate, the Bank of Canada\u2019s main tool is adjusting monetary policy, or interest rates. This effectively changes the cost of borrowing money for consumers and businesses.<\/p>\n

If inflation gets too high, then raising interest rates usually slows down the rate at which prices are increasing, while inflation getting too low means the economy could contract and even enter a recession<\/a>. This would likely result in cutting rates to encourage more business activity and job hiring.<\/p>\n

Getting monetary policy aligned with the immediate needs of Canada\u2019s economy is a fine balancing act that the Bank of Canada\u2019s governing body discusses on a regular basis at monetary policy meetings.<\/p>\n

\u201cThe Bank [of Canada] can only act on what it knows, which is that inflation is near its two per cent target and that the economy hasn\u2019t keeled over after a year of Trumponomics,\u201d said Jarvis.<\/p>\n

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\u201cCutting the overnight rate right before a possible spike in inflation would be terribly uncharacteristic of one of the world\u2019s most risk-averse central banks.\u201d<\/p>\n

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Wednesday\u2019s announcement will follow the Bank\u2019s second meeting of the year, and several weeks into the Iran war. Although inflation in February cooled to 1.8 per cent<\/a>, that was mostly before the war sent oil and gas prices skyrocketing.<\/p>\n

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\u201cCanada\u2019s inflation cooled in February, but that is backward-looking now that prices at the pump have skyrocketed in the wake of the U.S.\/Israeli war with Iran. We expect higher energy costs will lift headline inflation close to three per cent in the months ahead,\u201d said Leslie Preston, managing director and senior economist at TD Bank, in a statement.<\/p>\n

\u201cThe Bank of Canada\u2019s interest rate decision is coming up on Wednesday, and the Bank is universally expected to remain on pause. We will be listening closely for the Bank\u2019s assessment of the impact of the oil shock on Canada\u2019s economy.\u201d<\/p>\n

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The Bank of Canada has not changed its benchmark interest rate since the quarter percentage point cut to 2.25 per cent on Oct. 29, 2025<\/a>. Following the announcement last year, Governor Tiff Macklem said rates are \u201cat about the right level.\u201d<\/p>\n

Although many economists expect the Bank of Canada to continue taking a wait-and-see approach, higher inflation as a result of price shocks stemming from the Iran war could add pressure to the central bank the longer the conflict goes on.<\/p>\n

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\u201cGiven the inflationary threat from higher energy prices, [financial] markets are pricing in a quarter-point rate increase from the Bank of Canada later this year. We deem this unlikely,\u201d said Sal Guatuieri, senior economist and director of Economics at the Bank of Montreal in a statement.<\/p>\n

\u201cWe suspect policymakers will look past the oil-driven rise in prices and remain wary of economic risks until the fog from both the Iran war and the trade war lifts.\u201d<\/p>\n

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Wednesday\u2019s rate announcement also comes just a few weeks before the end of the federal government\u2019s fiscal year on March 31, and it\u2019s expected to provide an economic update shortly after. This follows the Budget 2025<\/a> released in November, which marked a new timeline for budget and fiscal update releases.<\/a><\/p>\n

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By pushing the budget release from the spring to the fall, the economic update now occurs in the spring.<\/p>\n

This means Ottawa will be expected to show Canadians how its spending plans outlined in the budget have been coming along and if they are on track to meet their goals.<\/p>\n

Global News sent the Department of Finance a request for when the spring economic update will be delivered.<\/p>\n

\u201cThe upcoming economic update will proceed as scheduled in the spring. The exact date will be announced in due course,\u201d said John Fragos, press secretary for the minister of finance and national revenue in response.<\/p>\n

Doug Porter, chief economist at the Bank of Montreal, says even with the potential of higher inflation on the horizon, the Canadian economy still needs room to grow.<\/p>\n

\u201cIf anything, the threat of higher inflation has rekindled chatter of a potential rate hike in 2026. We still view that as a very long shot indeed, with the economy struggling to grow, employment weakening heavily in recent months, core inflation moving closer to the two per cent target, and [Canada-United States-Mexico Agreement, or CUSMA] uncertainty still clouding the outlook,\u201d Porter said in a note to Global news.<\/p>\n

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\u201cTrade talks have finally restarted again after a four-month pause, but there are no guarantees of success. Against that backdrop, we look for the Bank of Canada to keep interest rates steady for an extended period, even as inflation temporarily flares higher on the oil price spike. \u201c<\/p>\n

\n\t\t&copy 2026 Global News, a division of Corus Entertainment Inc.\t<\/p>\n","protected":false},"excerpt":{"rendered":"The Bank of Canada is set to update interest rates on Wednesday as the Iran war brings a…\n","protected":false},"author":2,"featured_media":543286,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[52,48,1849,8334,46,43,5897,44,212011,41,39,42,40],"class_list":["post-543285","post","type-post","status-publish","format-standard","has-post-thumbnail","category-headlines","tag-bank-of-canada","tag-canada","tag-consumer","tag-donald-trump-tariffs","tag-economy","tag-headlines","tag-iran","tag-news","tag-spring-economic-update","tag-top-news","tag-top-stories","tag-topnews","tag-topstories"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/543285","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=543285"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/543285\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/543286"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=543285"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=543285"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=543285"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}