Back to today’s briefing

Story perspectives

Bank of Canada Holds Rate, Flags Oil-Driven Inflation Risks

5/1/2026

31 6

Summary

Story summary

The Bank of Canada kept its overnight rate at 2.25% on April 29, 2026, warning that high oil prices could force hikes.
Inflation is projected at about 3% in April, driven by gasoline, with core inflation above 2% and anchored expectations.
The bank raised its 2026 GDP forecast to 1.2% and said a sharp U.S. trade restriction could prompt a cut, while high oil prices or tariffs might require hikes.

History

Historical Context

The 1979 oil-price shock drove U.S. inflation to double-digit levels, prompting new Fed chair Paul Volcker to lift the federal funds rate from 11.5% to a peak of 17.6% by April 1980. Decades later, the Bank of Canada’s April 2026 decision to keep its overnight rate at 2.25% reflects the same reliance on tight policy to curb commodity-driven price spikes.

1 of 2

Story summary

The Bank of Canada kept its overnight rate at 2.25% on April 29, 2026, warning that high oil prices could force hikes.
Inflation is projected at about 3% in April, driven by gasoline, with core inflation above 2% and anchored expectations.
The bank raised its 2026 GDP forecast to 1.2% and said a sharp U.S. trade restriction could prompt a cut, while high oil prices or tariffs might require hikes.

1 / 2