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Bank of Canada holds policy rate at 2.25% as inflation eases gradually
The Bank of Canada said inflation is expected to hover near 3% before easing toward its 2% target by early 2027, with any future moves tied to economic conditions.
The Bank of Canada kept its policy rate unchanged at 2.25%, meeting broad expectations and marking the sixth straight decision to leave rates steady, according to FXStreet.
Attention shifts to Governor Tiff Macklem’s press conference, where the central bank is expected to stress that future policy changes will depend on economic conditions and not on a preset timeline.
The Bank of Canada’s Monetary Policy Report highlighted improving momentum after a year of weakness, with growth projected to pick up and second-quarter growth expected to be solid at 2.5%. It also said inflation should ease gradually from its recent peak, with inflation expected to be about 2.5% in the second half of 2026 and reach the 2% target by early 2027.
FXStreet said the Canadian dollar showed little reaction, with USD/CAD hovering around 1.4050 after the decision, as policymakers balance lingering inflation risks against an economy that remains in excess supply. The bank also noted uncertainty remains high, including adjustments to US tariffs and contained spillovers from Middle East war driven inflation.