Canada’s economy stirs back to life — but rates will likely hold steady, says RBC
The Bank of Canada (BoC), which has held its overnight rate at 2.25% since October 2025, is expected to stay put through the remainder of 2026.
Fan’s full-year growth projection edged up to 0.7% from 0.6% — a recovery that, while genuine, remains too fragile to warrant tighter monetary policy.
“We see less risk of higher or lower interest rates in the near term, as growth picks up while oil-related inflation concerns ease,” the report said.
Consumer spending has proven resilient over a period of high gasoline prices cutting into households’ buying power, Fan wrote. Business investment has strengthened, and net trade is set to add significantly to growth.
Canada’s unemployment rate, however, remains high despite recent improvements — a signal, Fan noted, that “interest rates at the lower end of the estimated neutral range are still appropriate.”
