The Bank of Canada held its policy interest rate at 2.25 per cent on Wednesday for the fourth consecutive time, a move widely expected by economists amid soaring energy prices brought on by the conflict in the Middle East.

“Canada is being buffeted by global events and geopolitical uncertainties, but our economy is growing and is expected to grow,” Bank of Canada governor Tiff Macklem said in prepared remarks.

After a contraction in the fourth quarter of 2025, the Bank of Canada has projected GDP growth will come in at 1.5 per cent for the first quarter of 2026.

Overall, the central bank expects economic growth will accelerate from 1.2 per cent in 2026 to 1.6 per cent in 2027 and then 1.7 per cent in 2028, broadly in line with projections made in January.

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Macklem said the Iran war may affect these projections, but expects the impact on overall growth “to be small” because higher global oil prices will increase the value of Canada’s energy exports, increasing national income.

“Our baseline forecast assumes oil prices will come down and U.S. tariffs will remain at the current levels…. There may still be a need to adjust the policy rate depending on how the risks evolve,” he added.

More to come …

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