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Bank of Canada expected to hold overnight rate at 2.25%

The BoC view that easing inflation and stabilizing growth will keep it in a wait-and-see stance, with expectations for no change through 2026.

Reported · Written up by our desk · Central Banks

The Bank of Canada is widely expected to hold its overnight rate at 2.25% at its Wednesday policy announcement, marking the central bank’s sixth consecutive pause after 50 basis points of cuts in September and October last year, according to Action Forex.

Action Forex said the BoC’s inflation and growth concerns have eased over the past month, with oil price moves so far not showing signs of turning into a broader, longer-lasting inflation shock. It noted gasoline costs have been higher for households, but that the price increases have not generally spread across the wider consumer spending basket.

The outlet also pointed to the BoC’s Business Outlook Survey showing longer-run inflation expectations remained well anchored in May, and to data suggesting Canada’s growth and labor market have improved after earlier weakness. Housing markets have firmed in cities such as Toronto and Vancouver, and monthly GDP data points to stronger growth in Q2.

Action Forex added that CUSMA is still expected to protect most Canadian exports from U.S. tariffs, after the U.S. administration opted not to extend the 2036 expiry date of the deal, while broader U.S. tariff rates have been edging lower. It cited Statistics Canada’s advance estimate for real GDP to rise 0.1% in May and noted BoC expectations for a soft but gradually improving per-person growth backdrop that keeps the rate on hold through 2026.

Latest closeGasoline (RBOB) $2.820 ▼7.2%

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