FX.co ★ Bank of Canada Holds Rate at 2.25%

The Bank of Canada left its target for the overnight rate unchanged at 2.25% in its September 2026 decision, in line with market expectations, but highlighted increasing upside risks to inflation. The Governing Council reported that the Canadian economy experienced a broad-based recovery in the second quarter, demonstrating resilience to adverse conditions following the outbreak of war in the Middle East, which has pushed up energy prices and long-term yields domestically. In addition, the Bank pointed to further inflationary risks stemming from the ongoing conflict and the reimposition of aggressive tariffs on Canadian exports to the United States. Even so, it emphasized that core inflation has so far remained at target despite the energy price shock since March. While underscoring these heightened inflation risks, the Bank reiterated that the uncertain economic outlook continues to preclude any clear guidance on the path of monetary policy for the remainder of the year.