News
June 10, 2026
Bank of Canada maintains the policy rate at 2¼%
The Bank of Canada today held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%
The Bank of Canada kept its key policy interest rate unchanged at 2.25%, citing weak domestic economic activity, persistent uncertainty around U.S. trade policy, and inflation pressures stemming mainly from higher energy prices.
Key Points:
Interest Rate Decision: The overnight rate remains at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.
Global Economy:
The ongoing conflict in the Middle East has entered its fourth month, increasing energy prices and disrupting supply chains.
U.S. growth remains strong, supported by consumer spending and AI-related investment.
Growth in Europe is weak due to higher energy costs.
China continues to benefit from strong export performance.
Trade policy uncertainty remains high as the U.S. considers additional tariffs.
Canadian Economy:
Canada's GDP declined 0.1% in the first quarter, weaker than expected.
Consumer spending grew modestly, but government spending, housing activity, and business investment were weak.
Exports fell while imports increased.
Employment rose in May, but overall job growth has been largely flat this year.
The unemployment rate remains elevated, at 6.6% in May.
The Bank expects growth to resume in the second quarter, but the economy is still operating with excess capacity.
Inflation:
CPI inflation rose to 2.8% in April, mainly because of higher oil prices and changes related to the removal of the consumer carbon tax from year-over-year calculations.
Core inflation measures have eased to around 2%.
Food inflation has moderated but remains elevated.
Shelter inflation continues to slow.
With oil prices about US$10 per barrel higher than assumed in April forecasts, overall inflation is expected to stay near 3% in the short term before gradually returning to the Bank's 2% target.
Why the Bank Held Rates Steady
The Bank believes:
Economic growth in Canada remains weak.
Trade uncertainty continues to weigh on the outlook.
Higher oil prices are pushing up headline inflation, but broader inflation pressures remain contained.
The Governing Council stated it will continue to look through the temporary inflation effects of the Middle East conflict but is prepared to act if higher energy prices begin feeding into broader, persistent inflation. The Bank emphasized its commitment to maintaining price stability and inflation expectations anchored around 2%.
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