The Bank of Canada kept its target overnight interest rate unchanged at 2.25%, as expected, for the fourth consecutive meeting, announced earlier today, Wednesday, March 18. The bank also maintained the interest rate on banks at 2.50% and the interest rate on deposits at 2.20%.

In its report, the bank stated that the war in the Middle East has caused volatility in global energy prices and financial markets, increasing risks to the global economy and potentially leading to higher global inflation in the near term.

After Canada’s GDP grew by 2.4% in the third quarter, the economy contracted by 0.6% in the fourth quarter, weaker than anticipated. The bank still expects moderate growth as it adjusts to tariffs.

Inflation, as measured by the Consumer Price Index, fell to 1.8% in February, down from 2.3% in January. The ongoing war could lead to higher gasoline prices, which would further fuel inflation in the coming months.

Under these circumstances, the Bank believes that holding the interest rate steady at today’s meeting is appropriate. The Bank will continue to assess the impact of tariffs and developments in the Middle East conflict on growth and inflation. The Bank stands ready to respond as needed and is committed to ensuring Canadians’ continued confidence in price stability during this period of global turmoil.