Bank of Canada announces rate decision
The Bank of Canada (BoC) maintained its policy rate at 2.25 per cent today in its fifth interest rate decision of 2026.
The decision comes as inflation rises above the BoC’s ideal target range of 2 to 3 per cent. Much of that inflationary spike has been driven by energy prices tied to conflict in the Middle East. In past statements, BoC leaders have said they are willing to look past a supply shock to inflation, but maintained that they will act if inflation starts to expand into other areas beyond energy.
“Near-term inflation expectations are sensitive to changes in gasoline prices but longer-term inflation expectations remain well anchored. War-related cost pressures are still working their way through some consumer prices but are being offset by downward pressure on other prices from continued economic slack,” a press release accompanying the decision reads. “CPI inflation is expected to stay elevated in June and then ease gradually in the coming months, returning to around 2% in early 2027, although this forecast is dependent on the path for oil and gasoline prices. Inflation is forecast to average around 2% in 2027 and 2028, albeit with some monthly fluctuations because of base-year effects.”
