- Decision
- Maintain
- Rate change
- 0 bps
- overnight rate target
- 2.75%
The Bank of Canada left its overnight rate target unchanged at 2.75 percent on 16 April, with the Bank Rate at 3.00 percent and the deposit rate at 2.70 percent, judging that escalating US trade-policy uncertainty is simultaneously damping domestic growth and stoking near-term inflation risks. After two 25 bp cuts since January that brought the policy rate down by a cumulative 50 bp, the central bank now emphasises caution. The corridor around the target rate remains at ±25 bp, and the Bank reaffirmed its recent adjustment setting the deposit rate 5 bp below the policy rate to support money-market functioning. CPI inflation eased to 2.3 percent in March from February’s 2.6 percent but is expected to be pulled lower over the coming year by the removal of the consumer carbon tax and weaker oil prices, even as tariffs and supply-chain disruptions could lift some prices; employment fell in March and wage growth is moderating as confidence, consumption, housing and business investment soften. Externally, oil prices have slid markedly since January and the Canadian dollar has firmed alongside broad USD weakness, while global markets have been volatile amid serial tariff announcements. The Governing Council will “proceed carefully”, monitoring how weaker demand, higher costs and shifting inflation expectations interact, and restated its commitment to support growth while keeping inflation well anchored.
Rate evolution
From June 2025 to September 2026, the Bank of Canada lowered its target for the overnight rate by 50 basis points to 2.25%, after holding at 2.75% through July 2025, cutting in September and October 2025, and then pausing through September 2026. The initial holds reflected high uncertainty over US tariffs and trade negotiations, while the cuts followed weakening exports and business investment, increased labour market slack and fading core inflation momentum, before the Bank said the overnight rate was about right if inflation stayed near 2% and activity evolved broadly as projected.
It held at 2.25% on June 10 and July 15, 2026, as uncertainty about US trade policy persisted and the conflict in the Middle East kept oil prices elevated, while the economy remained in excess supply even as growth picked up and broadened. On June 10, the Bank looked through a rise in headline inflation to 2.8% in April because core inflation had moved down to around 2% and there was limited evidence of broad-based pass-through, while warning it would not let higher energy prices become persistent inflation. By July 15, it judged the policy rate appropriate to sustain the recovery and return inflation to 2%, noting that second-quarter growth was estimated at 2.5%, consumer spending remained solid and export growth had resumed, while labour market conditions stayed soft and core inflation remained close to 2%. On September 2, the Bank again held the rate as the economy and inflation evolved broadly as forecast, noting that second-quarter gross domestic product rose 3.3% and the recovery broadened but excess supply persisted, while consumer price index inflation hovered around 3% mainly because of gasoline prices and core measures remained close to 2% in July, even as prolonged high oil prices and new tariffs increased upside inflation risks and made growth prospects more uncertain.