Canadian Overnight Interest Rate Left Unchanged at 2.25% as Was Expected – Currency Thoughts
Canadian Overnight Interest Rate Left Unchanged at 2.25% as Was Expected
March 18, 2026
Few countries have been caught in maelstrom of the Trump administration’s policy upheavals as much as Canada. The two countries share the world’s longest border and enjoy the largest bilateral trading relationship as well. From an historically cordial relationship, the two governments have soured immensely on one another. Trump’s massive changes and their unpredictability represent the be-all and end-all of the Bank of Canada’s challenges. Today’s Governing Council statement leads off with this disclaimer:
The war in the Middle East has increased volatility in global energy prices and financial markets, and heightened the risks to the global economy. The breadth and duration of the conflict, and hence its economic impacts, are highly uncertain. Prior to the war, the global economy was on pace to grow at around 3%, as expected in the January Monetary Policy Report (MPR).
For now, an unchanged 2.25% interest rate seems appropriate, but officials seems prepared to react in either direction:
With recent data pointing to weaker economic activity and uncertainty elevated, risks to growth look tilted to the downside. At the same time, inflation risks have gone up due to higher energy prices. We will continue to assess the impact of US tariffs and trade policy uncertainty, and how the Canadian economy is adjusting.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Bank of Canada
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