Economists Expect BoC to Hold Overnight Rate Again

Economists Expect BoC to Hold Overnight Rate Again
News| April 24, 2026| Monte Stewart
Canada + Apartment Buildings

The Bank of Canada is expected to keep its overnight rate unchanged at 2.25% on Wednesday and through the rest of 2026, according to a Reuters poll of economists.

All 41 economists surveyed between April 21 and 24 said the central bank would hold rates steady at its April 29 decision, while more than 80% — 33 of 41 respondents — forecast no change for the balance of the year. In March, 76% of those surveyed had expected rates to remain on hold in 2026.

The outlook comes despite financial markets pricing in a possible rate increase in the fourth quarter. Economists said any move higher would likely depend on whether rising energy prices trigger sustained inflation. Canada’s March inflation rate was 2.4%, still within the Bank’s 1% to 3% target range.

“Because of softening core inflation, it does give the Bank of Canada a lot more room to be flexible and patient,” Claire Fan, a senior economist at RBC, told Reuters. “They can wait for actual concrete signs of risk of inflation climbing higher, broadening and persisting…as opposed to rushing to make a decision.”

Inflation is forecast to average 2.9%, 2.7% and 2.5% over the current and next two quarters, roughly 50 basis points higher than projected in January, Reuters reported. Fourteen of 34 economists now expect at least one rate hike by the end of March next year.

Canada’s GDP is expected to grow 1.2% in 2026, down from 1.7% in 2025, while the unemployment rate forecast was revised to 6.6% from 6.7% in January.

“After energy prices settle down the focus is going to turn entirely to…where the USMCA is headed. And frankly, I’m a bit concerned on that front. I am concerned trade is going to continue to be a drag on the Canadian economy,” Douglas Porter, chief economist at BMO Capital Markets, told Reuters.

In March, the BoC held its key overnight lending rate at 2.25% for the third-straight time on amid uncertainty surrounding the war in the Middle East and U.S. tariffs.

The holds have followed a series of reductions.

BoC Governor Tiff Macklem has stated that the central bank’s governing council believes Canada’s economy can weather any coming storms tied to the strained Canada-U.S. trade relations and Washington’s uncertain trade policy.

But Macklem has warned that the BoC. could adjust rates in the event of unexpected economic shocks.

Pictured: Bank of Canada Governor Tiff Macklem

Photo: University of Toronto

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