The Bank of Canada on Wednesday held its overnight rate target at 2.25%, extending the pause it began after cuts ended in October 2025 into a seventh consecutive meeting. The Bank Rate was maintained at 2.5% and the deposit rate at 2.20%, leaving the bank's operating framework unchanged.
In its decision statement, the Governing Council said the data emerging since the previous meeting was largely in line with the projection contained in the July Monetary Policy Report, while saying that upside risks to inflation had increased.
SEVENTH HOLD SINCE OCTOBER 2025
Wednesday's decision marks the seventh consecutive hold at 2.25% since the Bank of Canada concluded its cutting cycle in October 2025.
Governing Council said it is prepared to adjust monetary policy as needed. The Bank Rate sits 25 basis points above the target and the deposit rate 5 basis points below it.
Governing Council said it will assess the sustainability of the economic rebound and the outlook for inflation. Canada's GDP rose 3.3% in the second quarter and the unemployment rate edged down to 6.4% in July, the Bank said.
UPSIDE INFLATION RISKS FLAGGED
The Governing Council statement said upside risks to the Bank's inflation forecast have increased. The Bank tied the higher upside risks to the continuing Middle East conflict, which is keeping oil prices and refinery margins high with little progress in reopening the Strait of Hormuz, and to new US tariffs and Canadian counter-tariffs that could feed into consumer prices.
At the same time, Governing Council said the economy and inflation were evolving broadly as forecast in the July MPR.
The next scheduled date for announcing the overnight rate target is 28 October 2026, when the Bank will also publish its next Monetary Policy Report.