Bank of Canada Holds Rate at 2.25% for a Sixth Straight Meeting

The Bank of Canada held its key overnight interest rate at 2.25% for a sixth consecutive meeting, a widely expected decision as policymakers grew more confident the economy is working through its headwinds. In its accompanying Monetary Policy Report, the central bank said Canada's economy had been weak but was showing signs of improvement, with growth expected to pick up after a soft start to the year and inflation projected to ease back toward the 2% target. The bank forecast GDP growth of about 0.7% in 2026, accelerating to roughly 1.8% in both 2027 and 2028 as economic slack is gradually absorbed. Governor Tiff Macklem cautioned that the two biggest risks to the outlook remain the evolution of Canada's trade relationship with the United States, now subject to annual reviews, and the war in the Middle East, which has pushed up global inflation through higher oil prices. Consumer spending has remained solid and export growth has resumed, though the labour market stayed soft, with unemployment around 6.5%. The bank's next rate decision is scheduled for early September.