Bank of Canada Expected to Hold Rate at 2.25%

OTTAWA — The Bank of Canada is widely expected to hold its benchmark interest rate steady at 2.25 percent when it announces its decision later this morning, accompanied by its quarterly monetary policy report containing updated economic forecasts.

Economists anticipate the central bank will maintain its cautious stance amid a complex economic environment marked by recent inflationary pressures and subdued growth. Headline inflation rose to 2.4 percent in March, up from 1.8 percent in February, primarily due to a surge in oil prices triggered by the outbreak of war in the Middle East in late February. The conflict has disrupted oil supplies, including through the Strait of Hormuz, complicating the bank's efforts to achieve its 2 percent inflation target.

Bank of Canada Governor Tiff Macklem has indicated that the governing council plans to "look through" the initial inflation spike from the energy shock while remaining vigilant to prevent those pressures from becoming entrenched. Core inflation measures, which exclude volatile items like energy, showed some softening in March, offering reassurance to policymakers.

Prior to the war, many forecasters projected easing inflation and a...