Mortgage Blog
Bank of Canada Rate Announcement - March 18, 2026
March 18, 2026 | Posted by: Crescent Mortgage Corp.
As was widely expected, the BoC held left its target for the overnight rate unchanged today at 2.25%.
The conflict in the Middle East has obviously increased the risks to the global economy. Given the everchanging landscape, energy prices and financial markets have become more volatile and increased uncertainty. Increasing oil and natural gas prices will boost global inflation in the near-term. Transportation bottlenecks in the Strait of Hormuz could begin to impact the supply of other commodities, such as fertilizer. Bond yields have risen, equity market prices have declined, and credit spreads have widened.
Following 2.4% growth in the third quarter of 2025, GDP in Canada contracted 0.6% in the fourth quarter. While this was weaker than anticipated, domestic demand grew by more than 2% due to strength in consumer and government spending, even though housing markets remained weak.
CPI inflation dropped to 1.8% in February, down from January’s 2.3% reading. Core inflation measures have also eased and are all close to the BoC’s 2% target. While food inflation slowed last month it remains elevated. The sharp increase in global energy prices has led to higher prices at the pump and this will impact inflation numbers for the coming months.
With recent data pointing to weaker economic activity and greater uncertainty, the BoC believes there are downside risks to growth. At the same time, the risk of higher inflation have increased due to higher energy prices. The BoC continues to monitor the ongoing conflict in the Middle East and the impact of US trade policies to assess their impact on growth and inflation. Should a change in policy be warranted, they are ready to act.
The next scheduled interest rate announcement is set for April 29, 2026.