The Bank of Canada held its overnight rate at 2.25% on September 2, making it seven straight meetings without a move. The last time the bank actually pulled the trigger on a cut was October 2025, which means Canadian monetary policy has been effectively frozen for nearly a year.
Strong growth, stubborn inflation, uncertain everything
Canada’s economy grew at an annualized rate of 3.3% in the second quarter of 2026, meaningfully ahead of the Bank’s own forecast of 2.5%. Headline inflation climbed to 3% in July, pushed up mainly by gasoline prices. That 3% number sits above the Bank’s 2% target, and it arrives courtesy of a US-led military conflict with Iran and disruptions in the Strait of Hormuz that have kept energy markets on edge.
Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers both emphasized that the bank is watching whether the Q2 growth rebound is the real thing or a temporary burst before trade headwinds bite harder.
Core inflation, which strips out volatile items like fuel, has remained relatively stable.
