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CIBC Economics

The Bank of Canada kept its overnight rate steady at 2.25% again this week, as it really combats two duelling risks. On the one hand, there is the risk of upside inflation driven by the oil price shock. But on the other hand, there is trade uncertainty still that&#8217;s weighing on growth within the economy.
The bank continued to state that they would look through any near-term spike in inflation driven by the oil price shock. And what they are really focusing on is core measures of inflation to see if they do need to respond by raising interest rates later in the year.
At the moment, the bank is saying that they&#8217;re seeing only a limited evidence that there is a pass through from oil prices to other measures of inflation.
And even though we know that some areas will accelerate later in the year, such as airline fares, we think that the weakness within the Canadian economy will mean that any acceleration in core measures of inflation will remain limited throughout the rest of the year.
This will mean that the Bank of Canada should be able to keep interest rates on hold throughout 2026.

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As the Bank of Canada continues to hold interest rates steady, what economic conditions could trigger a move?

As the Bank of Canada continues to hold interest rates steady, what economic conditions could trigger a move?

As the Bank of Canada continues to hold interest rates steady, what economic conditions could trigger a move?

As the Bank of Canada continues to hold interest rates steady, what economic conditions could trigger a move?

CIBC Economics

Andrew Grantham

Senior Economist

CIBC