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Bank of Canada expected to hold policy rate at 2.25% again
The BoC forecasts inflation near 3% in the near term before easing back toward its 2% target, while markets look for a decision on Wednesday at 13:45 GMT.
The Bank of Canada is widely expected to keep its policy rate unchanged at 2.25% on Wednesday, which would mark a sixth consecutive meeting with no change, according to FXStreet.
FXStreet reports the BoC has signaled a patient approach that weighs lingering inflation risks against an economy still operating in excess supply. The central bank expects inflation to hover around 3% near term before gradually returning toward its 2% target, and it reiterated it is largely looking through the impact of the Middle East conflict on headline inflation, citing limited evidence of broader pass-through from higher energy prices into consumer prices.
Policymakers also highlighted that they are not anticipating an imminent policy response to energy costs, while pointing to a likely rebound in growth during the second quarter. The BoC said any future move will depend on economic conditions rather than a preset timeline, with core inflation edging lower and economic weakness continuing to weigh on prices.
FXStreet notes inflation remains the key watch point after the headline CPI rose 3.2% year over year in May, up from 2.8% the prior month. The bank’s preferred measures were mixed, with the CPI-Common, Trimmed and Median at 2.7%, 2.0% and 2.1% respectively, and it scheduled its policy announcement for 13:45 GMT, followed by Governor Tiff Macklem’s press conference at 14:30 GMT.