Bank of Canada Holds Interest Rate at 2.25 Per Cent

The Bank of Canada maintained its benchmark interest rate at 2.25 per cent on July 15, 2026, marking the sixth consecutive time the rate has remained unchanged. Governor Tiff Macklem stated the current policy is appropriate to support economic recovery and return inflation to the 2 per cent target by early 2027.

The decision follows a period of significant volatility. Inflation peaked at 3.2 per cent in May, driven by a global energy shock after the closure of the Strait of Hormuz and renewed hostilities between the United States and Iran. Additionally, trade uncertainty increased after the United States moved the Canada-U.S.-Mexico Agreement to annual reviews on July 1 and implemented new tariffs on steel and aluminum.

Despite these headwinds, the bank noted a modest recovery, with April GDP rising 0.5 per cent and the unemployment rate dropping to 6.5 per cent in June. While the bank expects 2.5 per cent annualized growth in the second quarter of 2026, it lowered its overall 2026 GDP growth estimate to 0.7 per cent from 1.2 per cent due to a first-quarter contraction.

Macklem warned that while the bank is currently overlooking short-term energy price shocks, consecutive rate hikes remain possible if high oil prices persist and spill over into other goods and services. Due to an ongoing strike by security guards represented by the Public Service Alliance of Canada, the bank moved its scheduled press conference online.