The Bank of Canada kept its target overnight interest rate unchanged at 2.25%, as expected, for the fifth consecutive meeting, announced earlier today, Wednesday, June 10. The bank also maintained the interest rate on banks at 2.50% and the interest rate on deposits at 2.20%.

The bank’s report stated that the war in the Middle East is entering its fourth month, and the resulting increases in energy prices and disruptions to global supply chains are negatively impacting economic growth and pushing inflation higher. Uncertainty also surrounds trade policies.

The Consumer Price Index rose in April to 2.8%, as expected, reflecting higher energy prices due to both rising oil prices and the impact of the carbon tax on consumers. Inflation is expected to remain around 3% in the near term before gradually declining to 2%.

Under these circumstances, the Bank deemed it appropriate to maintain the current interest rate at today’s meeting. The Bank will continue to assess the impact of tariffs and developments in the Middle East conflict on growth and inflation. The Bank will not allow rising energy prices to translate into sustained inflation and is prepared to respond as needed. It remains committed to ensuring Canadians’ continued confidence in price stability during this period of global turmoil.