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Or sign-in if you have an account.Bank of Canada building photographed in Ottawa on Tuesday, May 19, 2026 Photo by HYUNGCHEOL PARK/PostmediaThe Bank of Canada came off as “dovish” as it held rates at 2.25 per cent for the fifth consecutive time while emphasizing a weak economy over inflation threats, say economists.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Subscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountorHere’s what they think the latest decision means for rates.“The Bank of Canada seems more comfortable with its look-through strategy on the energy price shock,” Ali Jaffery, chief economist at KPMG Economics, said in a note.He said ongoing excess supply in the Canadian economy along with “flatlining” gross domestic product (GDP) and cooling core inflation — a key metric for the central bank — provide policymakers some leeway.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againHe also said the Bank of Canada gave itself some “wiggle room” by calling stagflation — low or no growth and rising inflation — a “conundrum for monetary policy,” allowing it to hike rates if inflation heats up further.But Jaffery said he doesn’t think the overall economic numbers pointin the direction of a hike because he expects the economy to “perk up” in the second quarter after contracting slightly in the first as excess supply in the economy leaves plenty of room for improved growth without triggering inflation.“The Bank of Canada won’t rule anything out given the remaining risks around trade and the geopolitical conflict,” he said. “Our expectation is the Bank of Canada will hold policy for the remainder of the year.”“Emphasis on soft domestic economic factors looks to be outweighing some upside risks to inflation,” Bryan Yu, chief economist at Central 1 Credit Union, said in a note while calling the Bank of Canada’s tone “dovish.”Policymakers pointed to the drop in government spending, a slumping housing market and weak business investment as reasons for the hold, Yu said.Canada’s GDP for the first quarter was minus 0.1 per cent annualized, undershooting the Bank of Canada’s estimate of 1.5 per cent growth. It was also the second of two consecutive quarters of negative growth — the technical definition of a recession.The Bank of Canada also pointed to exports lagging imports in the first quarter.On inflation, it said “well-behaved patterns,” including the higher cost of energy, have yet to spill over into other consumer prices, Yu said.He doesn’t think Canada is in a recession, but said the Bank of Canada is prioritizing a struggling economy ahead of the oil price shock simply based on the placement of the former ahead of the latter in the statement.“From our view, the Bank of Canada is in no rush at this point to hike its policy rate given the soft economic profile,” he said.The main takeaway from the Bank of Canada’s decision to hold rates is that it is taking time “to assess the duelling risks to growth and inflation from elevated oil prices on the one hand and trade uncertainty on the other,” Andrew Grantham, an economist at CIBC Capital Markets, said in a note.He said policymakers are walking the line between “looking through” the latest increase in inflation while also guarding against higher inflation taking root.He also said they appeared to set aside the big job gains in May since they described the labour picture as volatile, with the unemployment rate hovering between 6.5 per cent and seven per cent.Still, Grantham said policymakers did not rule out rate hikes or cuts.If the Bank of Canada were forced to hike, he said the magnitude of those hikes would be greater than those of cuts because Macklem included the word “consecutive” in his opening remarks in relation to hikes.“Overall, however, we view today’s communication as highlighting a very patient central bank that has plenty of time to wait and see how risks to the economy play out,” he said.He said CIBC thinks current rates can support economic recovery this year and into 2027 as long as the uncertainty around trade and energy prices eases. 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