Canada Monetary Policy Research Brief

Bank of Canada holds overnight rate amid global volatility. The Bank of Canada held its key policy rate at 2.25 per cent for the fourth consecutive meeting as officials balance a softer domestic economy with renewed inflation risks. While economic growth resumed in early 2026 after a fourth-quarter contraction, underlying momentum remains muted. Consumer and government spending are supporting activity, but tariffs, trade uncertainty, and the ongoing conflict in the Middle East continue to weigh on inflation expectations, exports, and business investment. Slower population growth, affordability challenges, and broader economic uncertainty are also restraining the housing market. At the same time, the labour market remains soft with unemployment holding in the 6.5 to 7.0 per cent range. As a result, the central bank is taking a wait-and-see approach.