With war, trade woes and a shrinking population, the Bank of Canada was right to hold rates
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- Bank of Canada left its key policy rate unchanged at 2.25% on Wednesday, despite March inflation rising to 2.4% from 1.8% in February.
- Jeremy M. Kronick of the C.D. Howe Institute said the central bank’s decision was justified given the “upward blip” in inflation and the “uncertain breadth and duration” of the Middle‑East conflict.
- Steve Ambler warned that the war’s impact on oil and fertilizer shipments through the Strait of Hormuz is pushing food prices higher, threatening to de‑anchor inflation expectations.
- USMCA review adds trade‑policy uncertainty as the agreement’s future remains unclear.
- Manufacturing output has been falling for three years, signaling weakening demand.
- Core employment dropped by roughly 50,000 jobs in the first quarter of 2026, deepening the output‑gap challenge.
Why it matters: Canadian homeowners with variable‑rate mortgages avoid higher payments as the BoC keeps the policy rate at 2.25%, while the decision curbs inflation expectations, reducing pressure on future rate hikes and supporting economic stability.
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