OTTAWA, April 29 (Xinhua) --- The Bank of Canada on Wednesday held its target for the policy rate at 2.25 percent.
The central bank said in a press release that the outlook for economic growth in Canada is little changed from the January projection. After a contraction in the fourth quarter of 2025, growth is forecast to have resumed in early 2026.
The bank's April forecast projected GDP growth of 1.2 percent in 2026, 1.6 percent in 2027 and 1.7 percent in 2028 as growth in exports and business investment resumes along a lower trajectory, according to the release.
CPI inflation climbed to 2.4 percent in March because of sharply higher gasoline prices, and it will likely rise further in April to about 3 percent. Based on the assumption that oil prices will ease, inflation is forecast to come down to the 2 percent target early next year and remain around 2 percent over the projection horizon, said the release.
Bank of Canada Governor Tiff Macklem said the bank's monetary policy will depend importantly on what happens with the Canada-United States-Mexico trade agreement, the conflict in the Middle East, and the impacts of U.S. tariffs and energy prices.
"If the United States imposes significant new trade restrictions on Canada, we may need to cut the policy rate further to support economic growth," said Macklem. "Alternatively, if oil prices continue to increase ... the risk that higher energy prices become ongoing generalized inflation increases ... There may be a need for consecutive increases in the policy rate."
The Bank of Canada reduced its key interest rate by 25 basis points in October, while holding the rate steady in its following decisions.
