HEADLINE · ECONOMY
The Bank of Canada holds its policy rate at 2.25%. It projects a gradual recovery while highlighting elevated energy and trade risks.
Updated July 15, 2026 · About 4 minutes
The facts
- The Bank of Canada held the target for the overnight rate at 2.25%, the Bank Rate at 2.50% and the deposit rate at 2.20%.
- The Bank says the Canadian economy is showing signs of improvement and estimates second-quarter growth at an annualized rate of 2.5%.
- It projects GDP growth of 0.7% in 2026 and 1.8% in both 2027 and 2028.
- Annual inflation was 3.2% in May, driven mainly by gasoline. Excluding gasoline, inflation was 2.2%, while measures of core inflation remained close to 2%.
The context
The Bank believes growth is resuming after a weak start to the year. It remains cautious: developments in the Middle East conflict, oil prices and Canada–United States trade relations could quickly change the outlook.
The labour market remains relatively soft despite recent stability. The unemployment rate was 6.5% in June, leaving the Bank to balance modest growth against continuing inflation risks.
Why it matters
The hold provides no new immediate central-bank relief for variable-rate borrowers. The rates offered on mortgages, lines of credit and other loans still vary by financial institution.
The Bank expects inflation to move back close to 2% in early 2027. This is a conditional forecast, not a guarantee: persistently higher energy prices or weaker trade conditions could alter that path.
What to watch
- Oil and gasoline prices.
- Canada–United States trade relations.
- The labour market, household spending and housing.
- The next policy-rate announcement, scheduled for September 2, 2026.
Sources
- Bank of Canada, July 15, 2026 decision.
- Bank of Canada, July 2026 Monetary Policy Report.
- Reuters, July 15, 2026.
