Ottawa, ON – The Bank of Canada is poised to hold its trend-setting interest rate steady at 2.25% when it makes its next announcement on Wednesday, April 29, 2026. This decision comes despite a recent surge in inflation, largely attributed to the ongoing conflict between the United States and Iran, which has impacted global energy prices and financial markets.
Senior TD economist Derek Burleton indicated that the central bank has signaled its intention to "look through" this inflation shock, viewing it as a temporary consequence of geopolitical turmoil. "The rate is at 2.25%. It's been stuck there for a little while now. They're at a level they're kind of comfortable with. It's the low end of what they call the neutral rate," Burleton stated at a recent Canadian Mortgage Brokers Association – Ontario conference. Economists largely agree that the Bank will remain in a "wait-and-see" mode, as reported by the Bank of Canada itself.
Statistics Canada reported that the annual inflation rate climbed to 2.4% in March, marking the sharpest monthly increase in 14 months. Burleton anticipates this figure could rise further, potentially reaching 4%, but stressed that the Bank of Canada will likely assume this surge is short-lived, depending on the duration of the conflict. The central bank's monetary policy, according to Ashish Dewan, investment strategist at Vanguard Canada, is "ill-suited to address" ongoing trade tensions and geopolitical challenges, limiting the possibility of rate cuts as a response.
The Bank of Canada has maintained the 2.25% rate since October 2025, following a series of rate cuts in September and October of the previous year. While the current economic climate presents challenges, including potential risks of stagflation, the prevailing expectation is for the Bank to hold rates steady. Any future adjustments, should they occur, are seen as more likely to be a cut than a hike, unless the Middle East conflict becomes significantly protracted, which could lead to increased inflation and a potential inclination to raise rates.
The Bank of Canada will release its decision on the target for the overnight rate, along with its quarterly Monetary Policy Report, on April 29. Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers will hold a press conference at 10:30 a.m. ET to discuss the findings.