Canada’s central bank hit pause again, holding its policy rate at 2.25% while an oil shock does its best impression of an inflation jump-scare.
The Bank of Canada’s message: don’t overreact to the near-term price spike—yet. Gov. Tiff Macklem said officials agreed not to put too much weight on a surge the bank expects will peak around April, even as the Iran war and U.S. trade policy keep the outlook foggy.
- The hold was the fourth straight pause since a 0.25-point cut in October 2025.
- Brent crude was around US$109 a barrel, with the bank assuming it falls to about US$75 by mid-2027.
- Canada’s inflation rose to 2.4% in March from 1.8% in February, while grocery-store food prices climbed 4.4%.
- Housing is now expected to subtract 0.1 percentage points from 2026 GDP growth, down from a prior estimate that it would add 0.2 points.
The catch: The rate hold rests on a pretty delicate assumption set: oil cools, tariffs don’t escalate, and inflation expectations stay behaved. Meanwhile, housing is no longer helping—March home sales were 20% below the 10-year average, and unsold condos are piling up in Toronto and Hamilton.
Looking ahead… Macklem warned that persistently high oil prices could force rate hikes, so the next big test is whether energy costs retreat toward the bank’s US$75-a-barrel forecast—or keep feeding inflation and mortgage pain.
