The Bank of Canada holds the overnight interest rate at 2.75% 

After a series of rate cuts since last summer, the Bank of Canada decided to hold interest rates today, keeping the overnight rate at 2.75%.

The Bank of Canada highlighted that global “economic growth was solid in late 2024 and inflation has been easing towards central bank targets. However, tariffs and uncertainty have weakened the outlook.”

Scotiabank Senior Vice President and Chief Economist, Jean-François Perrault, says a pause was expected this month since the BoC is in a balancing act where inflation could rise and economic growth could fall because of the tariffs imposed on Canada by the United States.

Currently there are 25% tariffs on all Canadian imports to the US that aren’t compliant with the United States-Mexico-Canada Agreement (USMCA), along with sectoral tariffs on lumber, automobiles, steel and aluminum.

Prior to the tariff announcements, the BoC has been cutting rates steadily since June 2024, bringing rates down by 2.25% from their peak of 5%. Perrault thinks it’s likely the Bank of Canada will hold rates for the next several meetings as BoC Governor Tiff Macklem awaits critical information on trade policy, fiscal policy and the impact on growth and inflation from these developments. 

Canada’s inflation rate hit 2.3% in March, down from 2.6% in February.

The next policy rate announcement is on June 4.