Bank of Canada continues holding policy interest rate at 2.25 per cent

The Bank of Canada announced Wednesday that it will hold its target for the overnight rate at 2.25 per cent, with the Bank Rate at 2.5 per cent and deposit rate at 2.20 per cent.

The bank held its benchmark interest rate steady for a fourth consecutive time, but officials warned uncertainty over the war in Iran and the future of U.S. tariffs could push the policy rate either higher or lower in the coming months.

The bank says the evolving conflict in the Middle East is causing heightened volatility and identified U.S. trade policy continues to change trade patterns as another ongoing source of uncertainty.

The announcement comes ahead of the upcoming review of the Canada-U.S.-Mexico Agreement on trade.

Its April outlook assumes tariffs remain unchanged and the global benchmark price of oil drops to USD $75 per barrel by mid-2027.

The bank says the global economy overall is expected to grow by about 3 per cent this year, next year, and for 2028. It projects inflation over the next year to revise up due to the jump in energy prices.

The unemployment rate remains in the 6.5 to 7 per cent range.

The Bank’s April forecast projects GDP growth of 1.2 per cent this year, rising to 1.6 per cent in 2027 and 1.7 per cent in 2028.

The Consumer Price Index inflation rose to 2.4 per cent last month due to higher gas prices, with expectations it will likely rise further in April to about 3 per cent.

Based on the assumption that oil prices will ease, inflation is forecast to come down to the 2 per cent target early next year, and stay around that number over the projection horizon.

With files from The Canadian Press.

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