Bank of Canada expected to keep benchmark rate at 2.25% amid Iran war oil price spike

The Bank of Canada is expected to maintain its benchmark interest rate at 2.25% in its latest announcement. The central bank will also release its quarterly monetary policy report, including its latest economic forecast. The bank has faced challenges due to various factors affecting inflation and the economy. Initially, economists predicted easing inflation and a softer economy, but the outbreak of war in the Middle East in late February led to a surge in oil prices, altering inflation forecasts. Bank of Canada governor Tiff Macklem stated that the governing council will monitor the initial inflation spike driven by the oil price shock and prevent it from becoming entrenched. The inflation rate was 2.4% as of March.