The Bank of Canada (BoC) makes its next interest rate announcement on April 29. At its first two meetings of 2026, the BoC held its benchmark overnight interest rate steady at 2.25%. While inflation has since picked up, largely in response to the conflict in the Middle East that sent oil prices higher, the BoC is currently expected to hold steady again. As with any central bank meeting, it is critical to monitor comments from officials and the accompanying notes, which may give insight into where the BoC may see prices and the Canadian economy progressing, and how that might impact its upcoming monetary policy decisions.

• The BoC released its business and consumer surveys earlier this week. Both showed that inflation expectations were rising in response to the conflict in the Mideast. Prior to that, consumer and business confidence were improving with expectations for inflation moderating.
• Concerns over prices have raised the number of households who expect to pull back on spending. In particular, 28% of those surveyed said they are postponing major purchases.
• Canadian consumers expressed concern about the economy and rising inflationary pressures.
• On the business side, firms have increased their inflation expectations for the year ahead to 3.8%. Businesses are expecting to face higher costs and could be forced to raise their own selling prices.
• The BoC will closely monitor all available information ahead of its upcoming interest rate announcement. Canada’s central bank may want to see more evidence of how the Mideast conflict is impacting Canada’s economy before shifting interest rates.

Yesterday, US President Donald Trump said he is extending the ceasefire between the US and Iran, but the Strait of Hormuz remains effectively closed. Oil prices could remain elevated relative to their price before the conflict began. The BoC has much to consider amid the threat of higher prices, along with the possibility of slowing economic activity in Canada.

If you would like to discuss this economic and market update or have questions about your finances and investments, please feel free to contact me anytime.