Despite a jump in energy prices and disruptions in the global supply chain, the Bank of Canada is keeping its key lending rate consistent at 2.25 per cent.
The Bank Rate is still 2.5 per cent, and the deposit rate is 2.2 per cent. It hasn't changed since last October.
"Economic activity in Canada has been weak, and uncertainty about U.S. trade policy persists," read a release. "The conflict in the Middle East is ongoing, and oil prices remain elevated. Governing council is continuing to look through the war's near-term impact on headline inflation, but will not let higher energy prices become persistent inflation."
Since April, Canada's financial conditions have loosened. Global equity markets are still buoyant, and bond yields remain volatile. The Canadian dollar has weakened against the U.S. dollar and other currencies.
Gross Domestic Product edged down one-tenth of a percentage point in the first quarter after a contraction in the final quarter of 2025. Consumer spending grew 1.4 per cent, but government spending declined unexpectedly. Employment in May was 6.6 per cent.
The Consumer Price Index reached 2.8 per cent in April, reflecting the increase in energy prices and the elimination of the consumer carbon tax a year ago. Food price inflation remains elevated, but shelter costs are decelerating. Total inflation is expected to hover around 3 per cent before gradually easing towards 2 per cent later this year.
Economic growth is still solid in the U.S. Growth is supported by consumption and recent investments in artificial intelligence.
Strong exports continue to support economic growth in China.
The next Bank of Canada rate policy announcement is expected on July 15.
