Winnipeg 
The Bank of Canada is continuing its pause on interest rate changes, choosing stability amid uncertainty both at home and abroad.
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The Bank kept its overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. The decision reflects a cautious approach as policymakers weigh weaker economic activity against rising inflation risks, choosing to hold steady rather than adjust rates amid ongoing uncertainty and mixed signals across the economy.
While inflation has eased closer to the target, new pressures, particularly from energy prices, are starting to emerge again. Here are the highlights of the rate announcement:
- Global conditions have become more volatile, largely due to the conflict in the Middle East. Oil and natural gas prices have risen sharply, pushing inflation risks higher. Disruptions to supply chains, including potential impacts on the Strait of Hormuz, could also affect commodities like fertilizer, while financial markets have tightened with rising bond yields and falling equity prices.
- Canada’s economy showed uneven performance. GDP contracted by 0.6% in the fourth quarter of 2025, mainly due to inventory declines, despite domestic demand growing more than 2%. The labour market has weakened, with earlier job gains reversing and unemployment rising to 6.7% in February, alongside signs of continued softness in exports.
- Inflation cooled to 1.8% in February, down from 2.3% in January, with core measures also near 2%. However, rising gasoline prices linked to higher global energy costs are expected to push inflation upward in the near term, even as food price growth has begun to slow.
Looking ahead, the Bank expects modest growth but notes increasing downside risks. At the same time, inflation risks are rising. Officials say they will continue monitoring global tensions, trade uncertainty, and domestic conditions before making their next move, with the next rate decision scheduled for April 29, 2026.
