The Bank of Canada held its policy rate at 2.25% on Wednesday, in line with
market expectations, marking the fifth consecutive decision to leave rates
unchanged. The bank said it has not seen sufficient evidence that higher energy
prices have broadly passed through to other consumer prices. Governor Macklem
reiterated the BOC will not hesitate to raise rates if necessary to control
inflation. The bank noted the Iran war has driven up gasoline prices, pressuring
household budgets, while Canada’s status as a net oil exporter has boosted oil
receipts. The Governing Council said it will treat the conflict’s impact as
short-term but will not allow energy-driven price rises to become persistent
inflation.
