Bank of Canada Holds Rate Amid Oil Shock

Bank of America economists expect Bank of Canada to keep policy rate at 2.25% through 2026 despite Middle East oil price shock.
Domestic demand weakness, negative job creation since 2025 and decelerating private‑sector wages underpin the view that inflation stays near 2%.
Higher crude prices could lift inflation above 3% or trigger Fed hikes, the only scenarios that might force a BoC rate hike.
Output gap remains negative as GDP growth lags potential, while trade uncertainty and U.S. tariffs continue to dampen broader investment.