BoC hold, path unclear

The Bank of Canada has left its key rate at 2.25% for three straight decisions, and the next move is getting harder to read. (bankofcanada.ca) The bank held on March 18, 2026, after also staying put on January 28, and Governor Tiff Macklem said the policy rate has been unchanged since October. The Bank Rate is 2.5% and the deposit rate is 2.20%. (bankofcanada.ca, bankofcanada.ca, bankofcanada.ca) In its March decision, the central bank said war in the Middle East had raised oil and natural-gas prices, tightened financial conditions and increased uncertainty for both growth and inflation. It said Canada’s consumer price index slowed to 1.8% in February from 2.3% in January, but higher gasoline prices would lift headline inflation in coming months. (bankofcanada.ca, bankofcanada.ca) That leaves the Bank of Canada balancing two opposite signals at once: a weak domestic economy and a fresh external inflation shock. Canada’s gross domestic product fell 0.6% in the fourth quarter, the unemployment rate rose to 6.7% in February, and the bank said the labour market remains soft. (bankofcanada.ca, bankofcanada.ca) The U.S. backdrop has become less helpful for Canadian rate-cut hopes. In a Reuters poll published April 22, 56 of 103 economists said the Federal Reserve would still be in a 3.50% to 3.75% range by the end of September, up from a late-March survey in which nearly 70% expected at least one cut by then. (usnews.com) That poll said the nearly two-month war in the Middle East had pushed fuel prices higher, hurt consumer confidence and wiped out market pricing for near-term Fed cuts. The median forecast still called for one reduction this year, but nearly a third of economists now expect no change at all in 2026. (usnews.com) For Canadian borrowers, the practical split is simple: variable-rate loans track lender prime rates more closely, while fixed mortgage pricing is driven more by bond yields. After the March hold, Ratehub said Canada’s prime rate stayed at 4.45% and its lowest five-year variable mortgage rate stayed around 3.35%. (ratehub.ca) The Bank of Canada says it sets the overnight rate eight times a year, and its next scheduled decision is April 29, 2026, with a Monetary Policy Report due the same day. That report will show whether officials still see “excess supply” and slowing growth as the stronger force, or whether energy-led inflation has become too persistent to ignore. (bankofcanada.ca, bankofcanada.ca, bankofcanada.ca)