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Bank of Canada Holds Rate 2.25%, Flags Inflation Risks

7/17/2026

Summary

Macklem Holds Rates

Bank of Canada Governor Tiff Macklem kept the rate at 2.25 percent on July 15 2026, matching 36 Reuters economists.
The bank projected Q2 GDP growth of 2.5 percent and trimmed the 2026 forecast to 0.7 percent.
May inflation rose to 3.2 percent on gasoline and vegetable prices, while core inflation stayed near 2 percent.
Macklem warned that spikes could force a rate hike while expecting inflation to hit 2 percent by 2027 if oil falls to US$75.

Summary

Dollar Under Pressure

US bond yields rose, widening the gap with Canada and pressuring the Canadian dollar.
Variable-rate mortgages and lines of credit will keep borrowing costs unchanged, while fixed-rate mortgage rates stay tied to bond movements.
The Canadian dollar’s weakness could raise import costs but also help exporters by making goods cheaper abroad.
The Board set its next interest-rate decision for September 2 2026 and the Monetary Policy Report for October 28 2026.

History

Historical Context

The Bank of Canada, founded in 1934 to regulate credit, raised its policy rate to 6 % in 1995 under Governor Gordon Pitts as consumer-price inflation hit 5.5 %, sparking balance-of-payments worries. A decade later, Governor Mark Carney’s 2008 rate cuts helped Canada avoid the worst of the global financial crisis. Today Governor Tiff Macklem keeps rates at 2.25 % amid rising U.S. Treasury yields and a weaker Canadian dollar.

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Macklem Holds Rates

Bank of Canada Governor Tiff Macklem kept the rate at 2.25 percent on July 15 2026, matching 36 Reuters economists.
The bank projected Q2 GDP growth of 2.5 percent and trimmed the 2026 forecast to 0.7 percent.
May inflation rose to 3.2 percent on gasoline and vegetable prices, while core inflation stayed near 2 percent.
Macklem warned that spikes could force a rate hike while expecting inflation to hit 2 percent by 2027 if oil falls to US$75.

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