The Bank of Canada was right to hold rates, but where to from here?
Get the Finance newsletter
Daily finance — markets, central banks, M&A, the prints that move money. Free.
- Bank of Canada held its policy rate at 2.25% on Wednesday, matching market expectations.
- Headline inflation rose to 2.8% in April from 2.4% in March, hitting the upper bound of the bank’s 1‑3% target range.
- Gasoline prices jumped 28.6% year‑over‑year in April, driven by the war in Iran and the removal of the consumer carbon levy.
- Core inflation measures (CPI‑trim and CPI‑median) fell to 2.0% and 2.1% in April, down from 2.2% and 2.3% in March.
- Industrial product price index rose 11.4% year‑over‑year in April.
- Raw materials price index surged 31.6% year‑over‑year in April.
- Trade negotiations with the United States and Mexico, and the Iran war, add uncertainty to the bank’s future rate path.
Why it matters: The rate hold preserves borrowing costs for households and businesses, but the 28.6% jump in gasoline and the 31.6% surge in raw material prices raise producers’ input costs, squeezing profit margins and intensifying scrutiny of the bank’s inflation outlook as the bank monitors core inflation trends.
