Why did the Bank of Canada keep the policy rate at 2.25% on March 18?

The Bank held at 2.25% because energy shocks from the Iran war risk lifting headline inflation, while Canada’s growth and labour data are softening. Holding keeps options open. Policymakers want proof that core inflation is easing and that price pressures are not spreading beyond energy. If core cools, a longer hold is likely. If inflation broadens, a tougher stance becomes more probable.

What could push the Bank of Canada interest rate higher before cuts are considered?

A sustained rise in core inflation, broader price gains across categories, and faster month-over-month CPI could force a shift. Clear wage acceleration with flat productivity would also raise concern. If energy costs pass through into services and shelter, the Bank may turn more hawkish. Conversely, if core cools and the job market weakens further, pressure to hike fades and a longer hold prevails.

How does a 2.25% policy rate affect Canadian mortgages and the Canada housing market?

A steady policy rate supports variable mortgage stability, but fixed rates depend on bond yields. If core inflation eases, five-year yields could drift lower, helping fixed rates and buyer confidence. If “Iran war inflation” lifts yields, fixed rates may hold firm, weighing on affordability. Local supply-demand dynamics remain key. The Bank of Canada interest rate guides expectations but does not set home prices directly.

What should investors watch before the April 29 Bank of Canada meeting?

Prioritize core CPI measures like CPI-trim and CPI-median, month-over-month momentum, and the diffusion of price gains. Track oil and natural gas trends for pass-through risk, wage growth versus productivity, and shifts in the jobless rate. In markets, watch bond yields, bank funding costs, and housing data. These signals will shape expectations for the Bank of Canada interest rate and sector leadership.

Global Market Insights

Bank of Canada March 18: Hold at 2.25% as Oil Shock Risks CPI Upside

ByDanny Kontos March 19, 2026

The Bank of Canada interest rate stayed at 2.25% on March 18, with a clear warning that oil and natural gas spikes tied to the Iran war could lift headline CPI. Growth and jobs are cooling, so the Bank chose patience. Into the April 29 meeting, we think investors should track core CPI, energy prices, and housing data for clues. If inflation broadens beyond energy, the hold could last longer, or policy could turn tougher. Here is what it means for Canadians.