Bank of Canada Holds Key Rate at 2.25% for Fifth Consecutive Time
Bank of Canada holds key rate steady in fifth consecutive decision
The Bank of Canada held its benchmark interest rate unchanged at 2.25% on Wednesday, marking the fifth consecutive rate decision without a change as policymakers weigh slowing economic growth against rising inflation pressures, The Canadian Press reported (6-10-26).
Governor Tiff Macklem said the Canadian economy was weaker than expected in Q1 as US trade policy and the war in Iran contributed to heightened geopolitical uncertainty. He added that global oil prices, lifted by the Middle East conflict, have remained higher than projected in the Bank’s April forecast.
“Against this backdrop, the Canadian economy has remained soft and inflation has increased,” Macklem said.
Macklem said those competing pressures complicate monetary policy decisions. “Raising rates to dampen inflation could further slow the economy. Easing rates to support growth increases the risk that higher inflation becomes persistent,” he said. “For now, holding the policy rate unchanged balances those risks.”
Annual inflation rose to 2.8% in April, partly because of higher energy prices. The Bank now expects inflation to remain around 3.0% in the coming months before easing back toward its 2.0% target.
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