The Bank of Canada on 29 April 2026 left its overnight rate target unchanged at 2.25% (Bank Rate 2.50%, deposit rate 2.20%), judging that the spike in energy prices from the Iran war will lift headline inflation only temporarily while domestic growth remains modest. After two 25-bp cuts in September and October 2025 trimmed the policy rate to the current level, the corridor and liquidity settings were kept intact. CPI inflation rose to 2.4 % in March, core inflation is just above 2 %, and the Bank expects headline inflation to peak near 3 % in April before returning to the 2 % target early next year; GDP growth is projected at 1.2 % in 2026, rising to 1.7 % by 2028, as excess supply is gradually absorbed amid a soft labour market with unemployment in the 6½–7 % range. The Canadian dollar has been stable against the appreciating USD, and higher oil prices are lifting national income given Canada’s net-exporter status. Globally, the Middle East conflict and US trade policy are fuelling volatile financial conditions, higher bond yields and stronger energy-led inflation, yet the Bank still sees world growth around 3 % through 2028. Governing Council is “looking through” the immediate energy shock but stressed it will act if higher prices threaten to de-anchor inflation expectations.
Bank of Canada 2026-04-29
Bank of Canada holds overnight rate target steady at 2.25%
Bank of Canada kept its overnight rate at 2.25 % (Bank Rate 2.50 %, deposit rate 2.20 %), judging the Iran-related energy price surge transient amid modest growth. It expects CPI to peak near 3 % in April before reverting to the 2 % target by early 2027 and warned it will tighten if inflation expectations weaken.