The Bank of Canada held its policy interest rate at 2.25% on June 10, 2026, leaving the target for the overnight rate unchanged for a fifth consecutive decision.
The rate path helps explain the decision. The Bank cut the policy rate from 3.00% on January 29, 2025 to 2.75% on March 12, 2025, held through April, June and July, then cut to 2.50% on September 17 and to 2.25% on October 29. It has held at 2.25% on December 10, January 28, March 18, April 29, and June 10.
That means the June decision was not a fresh easing move. It was a continuation of a pause after the 2025 cutting cycle, with the Bank waiting to see whether weaker growth or renewed inflation pressure becomes the larger risk.
Governor Tiff Macklem said the conflict in the Middle East had increased economic pressure since the April rate decision. Higher energy prices and supply-chain disruption were weighing on global growth while pushing inflation higher.
The Bank also kept tariff risk near the centre of its assessment. Macklem said the United States continued to propose new trade restrictions, leaving Canadian exporters and businesses facing elevated uncertainty.
Canada's economic growth picture was weak. GDP edged down 0.1% in the first quarter, below what the Bank had expected in April. Consumer spending rose 1.4%, but government spending pulled back, housing activity declined, and business investment remained weak.
The labour market gave a mixed signal. Employment improved in May, but the Bank said monthly job numbers have been volatile. Looking through that volatility, employment has changed little since the start of the year and the unemployment rate has moved around the 6.5% to 7% range.
Inflation moved in the other direction. CPI inflation reached 2.8% in April, with the Bank pointing to higher global oil prices and to the earlier elimination of the Canadian consumer carbon tax dropping out of the 12-month inflation calculation.
Oil prices were about US$10 a barrel higher than the Bank had assumed in its April Monetary Policy Report. Based on that change, the Bank expected inflation to stay close to 3% in the coming months before gradually moving back toward the 2% target.
That left Governing Council with a difficult choice. Cutting rates could support growth but risk making higher inflation more persistent; raising rates could slow the economy further. Holding the rate was presented as a way to balance those risks for now.
The Bank also left room to move in either direction. If new U.S. trade restrictions hit growth, lower rates could be needed. If energy costs feed into broader price increases, the Bank said consecutive rate increases could become necessary.