Bank of Canada Holds Rate at 2.25% for Sixth Straight Decision

The Bank of Canada held its target for the overnight rate at 2.25% on 15 July, with the Bank Rate at 2.5% and the deposit rate at 2.20%, marking a sixth consecutive decision without change since the cut to that level in October 2025. Governor Tiff Macklem framed the decision around an economy that has resumed growing after a flat stretch, inflation that should ease gradually, and elevated uncertainty. Second-quarter GDP growth was estimated at about 2.5% and unemployment held at 6.5%, though the Bank left its full-year 2026 growth projection at 0.7%, rising to 1.8% in both 2027 and 2028. CPI inflation reached 3.2% in May, driven largely by gasoline; excluding gas it was 2.2%, with core measures near 2%. The Bank expects inflation to fall to around 2.5% in the second half of 2026 before reaching target in early 2027, assuming oil settles between US$70 and US$75 a barrel. Macklem cautioned that the longer oil prices stay elevated, the greater the risk they spill into other goods and services. The Bank named its trade relationship with the United States and the Middle East conflict as the two most important risks, and said housing activity appears to be stabilising. The next decision is scheduled for 2 September.