Bank of Canada holds rates amid energy price concerns

Wednesday 18 March 2026 - 15:15

The Bank of Canada announced on Wednesday that it would keep its key policy rate unchanged, signaling caution amid rising global energy prices. Governor Tiff Macklem emphasized that the central bank remains ready to raise rates if higher energy costs risk fueling persistent inflation.

The Bank has maintained its benchmark rate at 2.25% since last October. While the recent Middle East conflict is expected to push gasoline prices higher, Macklem noted that the immediate risk of energy-driven inflation spreading to other goods and services appears contained for now.

“It is too early to fully assess how the conflict will affect Canada’s economic growth,” Macklem said. “Our Governing Council will monitor the short-term impacts, but if energy prices remain elevated, we will act to prevent broader, persistent inflation.”

Before recent geopolitical tensions, Canada’s inflation had hovered around the central bank’s 2% target, with monetary policy providing moderate support to a slow-growing economy. Economists warn that prolonged disruptions in oil shipping routes, such as the Strait of Hormuz, could influence both inflation forecasts and overall growth.

The Bank’s cautious stance reflects the challenge of balancing economic recovery with inflation control, especially in a period of global uncertainty.