Bank of Canada holds interest rate

Today, the Bank of Canada held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.

The conflict in the Middle East is now in its fourth month. The resulting increases in energy prices and disruptions in global supply chains are weighing on global economic growth and pushing up inflation. At the same time, the US administration continues to propose new tariffs and trade policy uncertainty remains elevated.

In Canada, GDP edged down by 0.1% in the first quarter. Consumer spending grew 1.4%, but government spending unexpectedly declined. Housing activity also declined, and business investment remained weak. Exports fell while imports rose strongly as inventories were rebuilt. Employment was up in May, but looking through monthly volatility, employment in Canada is little changed since the start of the year. The unemployment rate continues to fluctuate in the 6 ½%-7% range, with the most recent reading at 6.6% in May.

The next adjustment announcement will be on July 15.