Bank of Canada holds at 2.25% as inflation rises to 2.8%

On June 10, 2026, the Bank of Canada again held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.

Canada: CPI inflation, year over year

Key points

• GDP edged down 0.1% in the first quarter, weaker than expected. Housing activity declined and business investment stayed weak.
• Unemployment was 6.6% in May, within the 6.5%–7% range.
• CPI inflation reached 2.8% in April, driven by energy prices and the end of the consumer carbon tax dropping out of the annual rate. Core inflation moved down to around 2%, and shelter inflation continued to slow.
• With oil about US$10 a barrel above the Bank’s April assumption, inflation is expected to hover around 3% in the near term before easing toward 2%.

For Calgary buyers

A fifth straight hold keeps variable-rate payments unchanged. The Bank repeated that it will not let higher energy prices become persistent inflation, so further rate cuts look unlikely while oil stays high. With more homes for sale this spring, buyers who are pre-approved can negotiate from a stronger position.

A weak start to the year

The first-quarter decline was broad. Consumer spending grew 1.4%, but government spending unexpectedly fell, housing activity declined, business investment stayed weak, and exports fell while imports rose as businesses rebuilt inventories. Employment rose in May, but looking through monthly swings, it has barely changed since the start of the year. The Bank expects growth to resume in the second quarter, though the economy will remain in excess supply.

The global backdrop

The conflict in the Middle East was in its fourth month, pushing up energy prices and disrupting supply chains. The US administration continued to propose new tariffs, keeping trade uncertainty high. US growth remained solid, the euro area was subdued by energy costs, and China was supported by strong exports. The Canadian dollar weakened against the US dollar and other currencies.

Inflation: energy, not a broad surge

April’s 2.8% reflected higher oil prices and the elimination of the consumer carbon tax dropping out of the 12-month comparison. The Bank saw limited evidence of energy costs spreading to other prices: core inflation moved down to around 2%, and the share of CPI components rising faster than 3% was close to its historical average. Food inflation moderated but stayed high. For homeowners and renters, the most relevant detail is that shelter inflation continued to slow. With oil roughly $10 a barrel above the Bank’s April assumptions, total inflation is expected to hover around 3% in the near term before easing gradually towards 2%.

Why the Bank is waiting

Governing Council said it will continue to look through the war’s near-term effect on headline inflation, but it will not let higher energy prices turn into persistent inflation. It also noted that Canadian financial conditions have loosened since April, with buoyant global equity markets and volatile bond yields. Put together, the message is balanced: the economy is weak enough to argue against a hike, and inflation is high enough to argue against a cut. The unemployment rate keeps fluctuating in the 6½% to 7% range, at 6.6% in May.

For Alberta, higher oil prices are a mixed blessing. They support energy-sector revenue and jobs, but they also raise costs for households at the pump and for businesses. In Calgary’s housing market, the bigger influences right now are supply and migration rather than the policy rate, which has not changed since last fall.