The Bank of Canada held its benchmark overnight rate at 2.25% on July 15 (local time), marking the sixth consecutive hold since the last 25-basis-point cut in October. The central bank maintained the bank rate at 2.5% and the deposit rate at 2.20%, citing signs of economic improvement and expectations that inflation will gradually ease from recent spikes. The decision comes amid ongoing uncertainties related to the Middle East conflict and US trade policy, which the BOC identified as key risk factors affecting the global economic outlook.
The rate hold matched market expectations compiled by Yonhap Infomax. In its statement, the BOC said the Canadian economy is showing signs of improvement, with growth gaining momentum and inflation projected to moderate gradually from its recent surge.
BOC Maintains Key Rates at July 15 Meeting
The Bank of Canada announced it is maintaining the overnight rate target at 2.25%, the bank rate at 2.5%, and the deposit rate at 2.20%. The central bank noted that Canadian financial conditions have eased since April, with global equity markets showing strength. US bond yields have risen while Canadian bond yields remained relatively stable, a divergence the BOC said has contributed to downward pressure on the Canadian dollar.
The bank stated that significant risks and uncertainties remain related to the Middle East conflict and US trade policies. Since the April Monetary Policy Report, oil price increases stemming from the Middle East conflict have somewhat dampened the global economic outlook, while AI infrastructure investment continues to support economic activity in an increasing number of countries.
Bank Projects 0.7% GDP Growth for Current Year
The BOC forecast Canadian economic growth of 0.7% for the current year. The bank projected growth of 1.8% for both 2027 and 2028. Oil prices remain below the peak recorded in April, though the bank noted the Middle East situation remains fluid and the path of global inflation will largely depend on how the conflict unfolds.
CPI Expected to Return to 2% in Early 2027
The central bank assessed that short-term inflation expectations remain sensitive to gasoline price fluctuations, while long-term inflation expectations remain well-anchored. Cost pressures related to the conflict continue to affect some consumer prices, but persistent economic slack is offsetting these with downward pressure on other goods.
The BOC stated that the Consumer Price Index remained elevated in June and is expected to ease gradually over the coming months, returning to the 2% level in early 2027. The bank projected inflation will average around 2% in both 2027 and 2028.
BOC Assesses Policy Stance as Appropriate for Recovery
The Bank of Canada said it remains prepared to adjust monetary policy as needed while continuing to assess the underlying strength of the Canadian economy and the inflation outlook. The bank judged that the current policy rate level remains appropriate to support economic recovery and return inflation to the 2% target.
FAQ
What did the Bank of Canada decide on July 15?
The Bank of Canada held its benchmark overnight rate at 2.25% on July 15 (local time), maintaining the bank rate at 2.5% and the deposit rate at 2.20%. This marked the sixth consecutive hold since the last rate cut in October.
Why did the BOC keep rates unchanged?
The BOC cited signs of economic improvement, with growth gaining momentum and inflation expected to moderate gradually from recent spikes. The bank assessed that the current policy rate level remains appropriate to support economic recovery and return inflation to the 2% target, despite ongoing uncertainties from the Middle East conflict and US trade policy.
