The Bank of Canada is set to announce its interest rate decision amid growing economic uncertainty sparked by the Iran war. Global oil prices have surged, driving up gas costs and raising inflation concerns.
Inflation in Canada cooled to 1.8% in February, but that data is now outdated. Rising energy costs are expected to push headline inflation close to 3% in coming months. The Bank of Canada has kept its benchmark rate at 2.25% since October 2025, stating rates are "at about the right level."
Economists widely expect the central bank to hold rates steady, despite markets pricing in a potential quarter-point hike later this year. Analysts believe policymakers will remain cautious, focusing on weak growth, labor market softening, and ongoing trade uncertainties under CUSMA.
The spring fiscal update, expected after March 31, will assess progress on Budget 2025 spending plans amid shifting global conditions.
