The Bank of Canada opted to keep its benchmark interest rate steady at 2.75 per cent on Wednesday, as policymakers await more convincing signs that inflation is sustainably returning to target.
The decision, which aligns with the expectations of a slight majority of economists tracked by Bloomberg, comes amid mixed signals in the latest inflation data. Statistics Canada reported Tuesday that Canada’s headline inflation rate eased more than anticipated in March, but core inflation—closely watched by the central bank—remains stubbornly high.
“While progress is being made, underlying inflationary pressures are still too persistent to justify a rate cut at this time,” the central bank said in a statement accompanying the decision. “The Governing Council remains concerned about risks to the inflation outlook and wants to see further evidence that downward momentum is broad-based and sustained.”
The move marks the fourth consecutive policy meeting where the rate has been held at 2.75 per cent, after a tightening cycle that saw interest rates rise sharply from historic lows in 2022 and 2023. Although financial markets had priced in a potential 25 basis-point cut, the Bank signalled it would maintain a data-dependent approach, particularly as wage growth and service prices continue to exert upward pressure on core inflation indicators.
The central bank will release its full Monetary Policy Report later today, including updated economic projections and inflation forecasts.
The next interest rate decision is scheduled for June 4.
