Bank of Canada holds key rate steady in fifth consecutive decision
Governor Tiff Macklem said weak growth and higher energy prices leave the central bank balancing recession risk against inflation pressure.
- The Bank held its benchmark interest rate steady at 2.25 per cent on Wednesday, marking the fifth consecutive decision to balance supporting Canada's economy against inflationary pressures.
- Canada Governor Tiff Macklem said the economy weakened more than expected in the first quarter, citing geopolitical uncertainty from the war in Iran and higher global energy prices.
- Macklem noted there is "limited evidence" energy price shocks are spreading to broader inflation, stating "Recession is not the word I would use" about the soft economy.
- KPMG chief economist Ali Jaffery said the focus on economic weakness gave the remarks a "dovish" tone, while CIBC senior economist Andrew Grantham called it a "very patient central bank."
- Annual inflation is expected to hold around 2.8 per cent in the coming months before easing, while CIBC continues to expect no policy rate change throughout 2026.
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Bank of Canada Holds Steady Amid Economic Uncertainty
The Bank of Canada is expected to maintain its interest rates at 2.25% amid conflicting economic indicators such as strong inflation and employment data, along with a looming recession. Experts cite the US-Canada trade tensions and volatile energy prices as major influencers on this policy decision.
Bank of Canada keeps key interest rate at 2.25% as it tries to balance competing economic risks
The central bank was largely expected to hold its benchmark rate at 2.25 — a fifth consecutive hold. Bank of Canada governor Tiff Macklem said the decision to stay on pause was made in effort to balance inflation threats from high oil prices, and sluggishness in the economy brought on by the uncertainty of the trade war with the U.S.
Monetary authority highlighted the inflationary pressures resulting from the conflict in the Middle East and pointed out that economic activity in the country remains weak
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