The Bank of Canada is widely expected to hold its trendsetting interest rate at current levels at the conclusion of its latest policy meeting on March 18.
The central bank’s benchmark overnight lending rate currently stands at 2.25% and is expected to remain at that level throughout much of this year.
Economists say the Bank of Canada is unlikely to make any changes with conflict in the Middle East raging, trade uncertainty growing, and economic data pointing to a sluggish economy.
Notably, economists point to elevated inflation risks from a global oil price shock due to the U.S.-Israeli war with Iran.
On the trade front, uncertainties are rising as Canada enters a review of the North American free trade deal with the neighbouring U.S.
As for the domestic economy, the latest data showed that Canada’s annual inflation rate for February came in at 1.8%, below the central bank’s 2% target.
However, most of that decline was due to favourable year-over-year comparisons after the federal government’s tax holiday ended in February 2025, sending prices sharply higher.
The Bank of Canada will also consider the latest jobs report, which showed that the unemployment rate rose to 6.7% in February as the economy shed 84,000 jobs.
