{"id":636538,"date":"2026-04-29T14:15:08","date_gmt":"2026-04-29T14:15:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/636538\/"},"modified":"2026-04-29T14:15:08","modified_gmt":"2026-04-29T14:15:08","slug":"bank-of-canada-holds-rate-at-2-25","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/636538\/","title":{"rendered":"Bank of Canada holds rate at 2.25%"},"content":{"rendered":"

OTTAWA \u2014 The Bank of Canada is holding its key policy interest rate<\/a> at 2.25 per cent for the fourth consecutive time as it warns of higher inflation for the short term. <\/p>\n

In its first monetary policy report (MPR) since January, the central bank projects inflation will peak around three per cent in April, before declining to its two per cent target early next year.<\/p>\n

That drop in inflation is based off an assumption that U.S. tariffs will remain at the current rate and that oil prices will drop from US$90 in the second quarter of 2026 to US$75 a barrel by mid-2027. That\u2019s a 15-dollar-per-barrel increase since the bank\u2019s previous MPR.<\/p>\n

\u201cAfter more than a year with inflation close to the two per cent target, higher global energy prices are pushing inflation up,\u201d Bank of Canada Governor Tiff Macklem said in his opening remarks. \u201cThe surge in gasoline prices combined with still-elevated food price inflation is squeezing more Canadians.\u201d<\/p>\n

A deeper dive into the various components of the consumer price index (CPI), which measures inflation, shows that rent and food prices remain higher than average, while other components have dropped back to their historical norms. <\/p>\n

\u2018Little evidence\u2019 oil driving overall costs: Macklem<\/p>\n

For now, the bank says there is \u201clittle evidence\u201d to show that oil prices are affecting the costs of goods and services more broadly. However, the country\u2019s top central bankers acknowledge that their projections are heavily dependent on the outcome of trade negotiations with the United States and on the war in Iran.<\/p>\n

\u201cGoverning council agreed to look through the war\u2019s immediate impact on inflation but if energy prices stay high, we will not let their effects become persistent inflation,\u201d Macklem said.<\/p>\n

Compared its January report, the bank says its growth forecast has remained relatively unchanged. While consumer and government spending are pushing growth up, U.S. tariffs and trade uncertainty are weighing on exports and business investment pushing it down. <\/p>\n

The bank believes GDP will grow at 1.2 per cent in 2026, rising to 1.6 per cent in 2027 and 1.7 per cent in 2028.<\/p>\n

Mideast war to affect energy exports<\/p>\n

\u201cThe conflict in the Middle East will affect the composition of growth, but the impact on overall growth is expected to be small because higher oil prices increase the value of our energy exports even as they squeeze consumers and many businesses.\u201d<\/p>\n

The Bank of Canada will make its next interest rate decision on June 10.<\/p>\n

If oil prices come down as expected and U.S. tariffs remain unchanged, the governor suggested the bank\u2019s current policy rate could hold. Though he did not rule out adjustments. <\/p>\n

\u201cIf this holds true, a policy rate close to current settings looks appropriate to support adjustment in the economy and return inflation to target,\u201d Macklem said, adding there may still need to be changes depending on how the risks evolve. \u201cBut if the economy evolves more broadly in line with the base case, changes in the policy rate can be expected to be small.\u201d <\/p>\n

The impact of the measures included in Tuesday\u2019s federal economic update were not taken into consideration in the bank\u2019s latest monetary policy report. <\/p>\n","protected":false},"excerpt":{"rendered":"OTTAWA \u2014 The Bank of Canada is holding its key policy interest rate at 2.25 per cent for…\n","protected":false},"author":2,"featured_media":636539,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[4498,45,49,48,46,133,47,14236,14237],"class_list":["post-636538","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-banks","tag-business","tag-ca","tag-canada","tag-economy","tag-finance","tag-national","tag-oilgas","tag-utilities"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/636538","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=636538"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/636538\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/636539"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=636538"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=636538"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=636538"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}