BoC: Monetary Policy Decision Press Conference Opening Statement

The Bank of Canada today held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%. The evolving conflict in the Middle East is causing heightened volatility and US trade policy continues to reshape global trade patterns. Both are ongoing sources of uncertainty. The Bank’s April outlook assumes tariffs remain unchanged and the global benchmark price of oil declines to US$75 per barrel by mid 2027. The Iran war has led to sharply higher energy prices and transportation disruptions, diminishing growth prospects in oil-importing countries and boosting inflation worldwide. In the United States, growth is still expected to be solid over the projection horizon, boosted by AI-related investment and consumption growth. China’s economy is being supported by robust exports. In the euro area, higher prices for oil and natural gas will weigh on economic activity. Financial conditions have been volatile, reflecting daily developments in the Middle East and shifting market expectations for inflation and interest rates. Bond yields are modestly higher since January while equity markets, which weakened sharply at the outset of the war, have recovered. Since the start of the war, the US dollar has appreciated against most major currencies. The Canada-US exchange rate has been relatively stable. BOC FORECAST SEES OIL PRICES FALLING TO $75/BARREL BY MID-'27 || FEW SIGNS OIL SPIKE HAS FED THROUGH TO BROADER PRICES #OOTT BoC leaves interest rate steady at 2.25% The Bank of Canada (BoC) announced on Wednesday that it decided to leave its overnight rate unchanged at 2.25%, maintaining the Bank Rate at 2.5% and the deposit rate at 2.20%. "The Iran war has led to sharply higher energy prices and transportation disruptions, diminishing growth prospects in oil-importing countries and boosting inflation worldwide," the bank stated in the report. "The global economy is expected to grow by about 3% in 2026, 2027 and 2028. Projections for inflation over the next year are revised up because of the jump in energy prices." The central bank's statement added that its April forecast projects GDP growth of 1.2% in 2026, rising to 1.6% in 2027 and 1.7% in 2028 "as growth in exports and business investment resumes along a lower trajectory."

Before the outbreak of the war in the Middle East, the Canadian economy was evolving as expected. Since the war began, oil prices have risen, pushing inflation up, and the outlook has become more uncertain. Economic growth in Canada has been broadly consistent with the outlook in the January Report. Consumer and government spending are supporting gross domestic product (GDP), while US tariffs and related trade uncertainty are weighing on exports and investment. Inflation had been slowing as expected before the oil price shock occurred. The war in the Middle East is already affecting the economy. The immediate impact has been higher gasoline prices, pushing up consumer price index inflation to 2.4% in March. The outlook is highly conditional on key assumptions, including that tariffs remain unchanged and that oil prices gradually decline from US$90 in the second quarter of 2026 to US$75 per barrel by mid‑2027 (see the Tariff and other assumptions section). BOC: NOMINAL NEUTRAL INTEREST RATE IS ESTIMATED TO BE IN THE RANGE OF 2.25% TO 3.25%, UNCHANGED FROM JANUARY. BOC'S GOV. MACKLEM: IMPACT OF THE MIDDLE EAST WAR ON OVERALL CANADIAN GROWTH IS EXPECTED TO BE SMALL. BC: MOST MEASURES OF ANNUAL WAGE GROWTH ARE BETWEEN 3% AND 3.5%. ...

Governor Tiff Macklem discusses the Monetary Policy Report and the key issues involved in the Governing Council’s deliberations about the monetary policy decision. The Governor and Senior Deputy Governor then answer questions from reporters.