TOP STORY
Bank of Canada Holds at 2.25% for a Fifth Straight Time
The Bank of Canada left its policy rate at 2.25% this morning, a fifth consecutive hold as Governor Tiff Macklem tries to balance a soft economy against energy-driven inflation (Bank of Canada). Inflation climbed to 2.8% in April on the global energy shock, and the Bank now expects it to hover near 3% in the coming months before easing back toward 2% (BNN Bloomberg). For B.C. and Alberta builders, the read-through is more of the same: borrowing costs stay frozen, financing math on projects doesn’t get easier, and there is no rate relief on the horizon to spark stalled residential investment. With the Bank explicitly leaving the door open to both hikes and cuts, contractors and developers should plan for a flat-rate environment well into 2026 rather than betting on cheaper money.
FROM THE PRESS CONFERENCE
A soft economy, rising prices. Macklem said Q1 came in weaker than expected as U.S. trade policy and the war in Iran fed uncertainty: “the Canadian economy has remained soft and inflation has increased.” A strong May jobs report, he added, hints the economy could rebound in Q2 (CBC News).
Oil spike, contained — for now. There is so far “limited evidence” that higher energy prices are passing through into broader inflation, Macklem said — the key reason the Bank is willing to look through the spike rather than react to it.
Guidance cuts both ways. Macklem warned higher inflation could force “consecutive increases” in rates — but said that if the U.S. imposes “significant new trade restrictions on Canada,” the Bank may need to cut instead (Globe and Mail).
INSTANT REACTIONS
CIBC — Andrew Grantham — reaction — Called it the move of a “very patient central bank” content to wait and see how the risks play out. CIBC continues to expect no change to the policy rate through the rest of 2026.
KPMG — Ali Jaffery — reaction — Read Macklem’s focus on recent weakness as “dovish” — tilting toward eventual easing rather than the hikes the inflation numbers might otherwise imply.