Canada Monetary Policy Research Brief

Central bank holds for third consecutive meeting. In a widely expected move, the Bank of Canada maintained its key policy interest rate at 2.75 per cent, marking the third straight hold. This comes after the monetary authority began lowering its overnight rate from 5.0 per cent just over a year ago. One of the main reasons for this pause was lingering uncertainties stemming from protectionist U.S. trade, as well as the corresponding impacts from supply chain disruptions and retaliatory tariffs on inflation. Additionally, Canada’s economy has shown some resilience. First-quarter GDP growth was stronger than expected, the labour market has not collapsed and household spending is holding up, despite falling consumer confidence. Combined, mounting inflationary pressures have formed, which on top of tariff uncertainties, reinforced the Bank’s decision to hold.