FX.co ★ Bank of Canada Holds Rates as Expected

The Bank of Canada kept its overnight target rate unchanged at 2.25% at its April 2026 meeting, in line with market expectations and prior guidance. Given elevated geopolitical uncertainty, the Bank avoided signaling a clear path for future interest rate moves.

Inflation accelerated in March, driven primarily by higher energy prices following the outbreak of war in the Middle East. However, the Bank emphasized that these energy cost increases have not yet spread meaningfully to other sectors of the economy. While inflation expectations have edged higher, they remain well anchored, supporting the decision to hold rates steady.

In its updated projections, the Bank of Canada expects GDP growth of 1.2% this year and 1.7% next year. These forecasts suggest that the economy is demonstrating resilience to the energy price shock, which is being cushioned by existing excess supply.