Toronto – The Bank of Canada left its overnight policy rate unchanged at 2.25% on Wednesday, matching its July outlook. The Bank also kept the Bank Rate at 2.50% and the deposit rate at 2.20%.
Inflation remains near 3% and core measures hover around the 2% target. The index excluding gasoline was 2.2% in July. The central bank noted that gasoline price pressures continue to lift headline inflation.
The decision comes as the Canadian economy showed a strong rebound in the second quarter, with growth spreading across consumer spending, housing, exports and business investment. The unemployment rate slipped slightly in July, although labour demand is still modest and excess capacity persists.
The bank highlighted heightened risks to its inflation outlook, citing new U.S. tariffs and volatile oil prices linked to the ongoing Middle East conflict and limited progress on reopening the Strait of Hormuz. A statement from the Bank said, "With the Middle East conflict still ongoing and little progress reopening the Strait of Hormuz, upside risks to the Bank's inflation forecast have increased."
By holding rates, the Bank signals a cautious stance while monitoring external shocks. No change to forward guidance was announced.
