Bank of Canada holds rate at 2.25% amid energy inflation risk

By Tahani Elghazaly
Published March 18, 2026

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The Bank of Canada left its key policy rate unchanged at 2.25% on Wednesday, while keeping the Bank Rate at 2.5% and the deposit rate at 2.20%, underscoring a cautious stance as geopolitical tensions and energy market volatility intensify. The central bank said the war in the Middle East has increased volatility in global energy prices and financial markets, adding new risks to the world economy.

The Bank said Canada is entering this period from a relatively fragile position. GDP contracted by 0.6% in the fourth quarter, unemployment rose to 6.7% in February, and near-term growth appears weaker than expected. At the same time, inflation eased to 1.8% last month, but the recent jump in oil and natural gas prices is expected to push headline inflation higher in the months ahead.

Governor Tiff Macklem said policymakers would look through the war’s immediate impact on inflation, but made clear that the Bank would not allow higher energy prices to spread into broader and more persistent inflation. The next scheduled rate decision is set for April 29, 2026.