The Bank of Canada kept its overnight policy rate at 2.25% on July 15, 2026, marking the sixth consecutive hold as Governor Tiff Macklem and his colleagues opted for patience over action. At the same time, the bank revised its 2026 real GDP growth forecast sharply lower, cutting the projection that stood at 1.2% in the April Monetary Policy Report down to 0.7%.
What the Bank of Canada actually said
The April MPR had already baked in a cautious outlook, projecting 1.2% real GDP growth for the year. The July update knocked that figure down to 0.7%, reflecting a collision of forces the bank has been navigating since the post-recession rebound began losing steam.
Governor Macklem has repeatedly flagged inflation risk tied to energy prices as a specific concern, which creates an uncomfortable bind. Growth is softening, but inflation has not cooperated enough to justify rate cuts.
Uncertainty around U.S. trade policy adds another layer of complexity. Canada’s export-heavy economy is unusually sensitive to cross-border friction, and any escalation in tariff tensions can translate quickly into weaker business investment and consumer confidence.
