The Bank of Canada held its key policy interest rate at 2.25 per cent [1] on April 29, 2026.

This decision marks the fourth consecutive time [2] the central bank has maintained the rate. The hold comes as Canada faces a volatile economic landscape characterized by rising energy costs and trade instability, leaving policymakers to balance price stability against growth risks.

Governor Tiff Macklem said, "Maintaining the policy rate today, where it is, was the right thing to do for today."

Despite the steady rate, the bank issued a warning regarding short-term price increases. Macklem said the bank expects inflation to peak around three per cent [3] in April before moving back toward a two per cent [4] target early next year.

Several external factors are contributing to this outlook. A senior bank official said the war in Iran is adding pressure to energy prices, which is one of the factors behind the higher-inflation outlook. Other pressures include uncertainty surrounding U.S. tariffs, and the ongoing review of the Canada-United States-Mexico Agreement (CUSMA).

These geopolitical tensions create a complex environment for the bank. While energy spikes push prices higher, the uncertainty of trade agreements complicates the projection of long-term economic stability—a tension that influenced the decision to avoid rate changes at this time.

Governor Macklem said that the current path is intended to steer the economy back to the target level. The bank continues to monitor how global conflicts and trade policy shifts impact domestic consumer prices.

“Maintaining the policy rate today, where it is, was the right thing to do for today.”

The Bank of Canada's decision to hold rates despite rising inflation projections suggests a cautious approach to monetary policy. By maintaining the 2.25% rate, the bank is attempting to avoid over-tightening the economy while waiting to see if the inflation peak in April is a temporary spike caused by external geopolitical shocks—such as the conflict in Iran—or a systemic trend driven by U.S. trade policy changes.