The Bank of Canada decided to hold its key interest rate at 2.25% for now.
➡️ Even though inflation has been easing, new global risks are making the outlook less certain.
🌍 What’s Driving Concern: Iran War
The conflict involving Iran is creating new economic pressure.
💥 Why it matters:
- Oil and natural gas prices are rising
- Higher energy costs = higher inflation in the short term
Governor Tiff Macklem emphasized that this added volatility is making things more unpredictable.
📊 Economic Snapshot
Recent data from Statistics Canada shows inflation dropped to 1.8% in February (down from 2.3% in January). This data was collected before the recent conflict escalated, meaning inflation could trend higher again soon.
Canada’s economy is showing mixed signals. GDP declined by 0.6% in the last quarter. Growth in 2026 is returning, but slower than expected. Unemployment rose to 6.7%. The labour market is weakening, with recent job gains reversing.
⚖️ The Central Bank’s Dilemma
The Bank is stuck in a tough spot:
- 📈 Raising rates → helps control inflation, but slows the economy
- 📉 Lowering rates → supports growth, but risks higher inflation
👉 Right now, they’re choosing to wait and watch.
⛽ Energy Prices & Ripple Effects
Higher oil prices could increase everyday costs (gas, transportation, goods) and reduce how much consumers can spend elsewhere.
There are also supply risks. Disruptions in key shipping routes like the Strait of Hormuz and potential impact on goods like fertilizer and other imports.
What this means for people:
- 💸 Higher living costs in the short term
- 🛢️ Some offset from stronger Canadian energy exports
- 📉 Less disposable income overall
Globally, we’re seeing stock markets trending lower, borrowing costs increasing, and bond yields rising
➡️ All signs of growing uncertainty.
🔮 What’s Next
The Bank of Canada will make its next rate decision on April 29, alongside a full economic outlook report.
Canada is in a tricky position because the economy is slowing and inflation could rise again due to global conflict.
👉 For now, the Bank is holding rates steady while watching how things unfold.
📌 Our Advice in Today’s Market
- If you’re currently in a variable rate, it may be worth exploring what your fixed-rate options look like today
- If your mortgage is coming up for renewal, start the conversation early so you’re not rushed into a decision
Locking in isn’t the right move for everyone, but understanding your options gives you more control. With uncertainty increasing, having a plan in place can help you stay ahead of potential rate changes.
Contact us today to review your situation and determine what strategy makes the most sense for you.
