Bank of Canada Expected to Hold Rates as Inflation Pressures Persist

By Tahani Elghazaly
Published April 24, 2026

Latest news on WhatsApp أجدد الأخبار على واتساب

The Bank of Canada is expected to keep its key interest rate unchanged at its next meeting, as markets watch the impact of rising energy prices on inflation while the Canadian economy continues to show signs of caution and slower growth.

A Reuters poll conducted from April 21 to 24 found that most economists expect the central bank to hold its overnight rate at 2.25 percent at its April 29 meeting, and to keep it at that level through the end of the year. The forecast suggests that the bank is unlikely to raise rates in response to higher energy prices alone unless those pressures become broader and more persistent.

Canada’s latest inflation reading stood at 2.4 percent in March, close enough to the Bank of Canada’s target range to avoid immediate alarm, but still high enough to keep policymakers cautious. Economists note that Canada’s position as a net energy exporter may soften part of the shock from higher oil prices, though it does not remove the risk that energy costs could feed into other prices.

The decision is delicate. Raising rates could add pressure on households and businesses at a time when growth is weak and the labour market has slackened. Cutting rates too early, however, could send the wrong signal if energy and food prices continue to push inflation higher.

The poll’s median forecasts show inflation remaining slightly above target in the coming quarters, at 2.9 percent, 2.7 percent and 2.5 percent. Some economists also expect at least one rate increase by March 2027 if inflation pressures become more entrenched.

The rate decision also comes against the backdrop of trade uncertainty with the United States. The upcoming CUSMA review and possible trade tensions add another layer of risk for businesses and investors. Forecasts cited in the poll suggest Canadian growth could slow from 1.7 percent in 2025 to 1.2 percent in 2026, with unemployment expected at 6.6 percent.

For households in Canada, a rate hold means borrowing costs may remain stable for now, but it does not mean cost pressures are over. Energy bills, housing costs, grocery prices and mortgage payments will continue to shape how people experience inflation day to day.

The Bank of Canada appears to be in wait-and-see mode. It does not want to squeeze a soft economy with another rate increase, but it also does not want to ignore inflation risks that could return through higher energy prices. For now, the likely message is clear: hold rates, watch the data and keep future options open.