Bank of Canada holds interest rate as it warns of higher inflation
The Bank of Canada held its key policy interest rate at 2.25% for the fourth consecutive time, warning of higher inflation in the short term, projected to peak at 3% in April. The bank's growth forecast remained relatively unchanged, with GDP expected to grow at 1.2% in 2026, rising to 1.6% in 2027 and 1.7% in 2028.
The Bank of Canada maintained its key policy interest rate at 2.25% for the fourth time in a row, citing higher inflation in the short term. Inflation is projected to peak at 3% in April before dropping to the 2% target early next year, assuming US tariffs remain unchanged and oil prices decrease to $75 a barrel by mid-2027. The bank's growth forecast remained relatively stable, with GDP growth expected at 1.2% in 2026, 1.6% in 2027, and 1.7% in 2028. The central bank's projections depend on trade negotiations with the US and the outcome of the war in Iran. The next interest rate decision is scheduled for June 10. The bank's current policy rate is expected to hold if oil prices and US tariffs evolve as anticipated.
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