Bank of America economists expect the Bank of Canada to keep its policy rate at 2.25% throughout 2026 despite rising oil prices.
Domestic demand weakness, negative job creation since 2025 and decelerating wage growth are seen as buffers against inflationary pressures.
Inflation has been anchored near 2% for 18 months, but a shock above 3% or Fed hikes could force a rate rise.
Higher oil prices benefit Canada as a net exporter, yet trade uncertainty and U.S. tariffs continue to weigh on investment.