June 10, 2026
Bank of Canada (BoC) Holds Steady Amid Two-Sided Outlook
KEY SUMMARY POINTS
- As expected, the Bank of Canada (BoC) held its policy rate steady at 2.25%.
- Governor Macklem emphasized the Bank is looking through energy-driven inflation, with limited evidence of broad-based pass-through.
- The outlook is shaped by two-sided risks: uncertainty around United States–Mexico-Canada Agreement (USMCA) justifies an accommodative stance, while the risk of energy price spillover into broader inflation could warrant a more restrictive stance.
WHAT HAPPENED?
The BoC held its policy rate unchanged at 2.25%, with communications broadly unchanged and offering little in the way of new guidance.
Both the statement and press conference reinforced a neutral tone, with Governor Macklem emphasizing a deliberate data-dependent approach.
Overall communications largely reflected an update of known conditions, noting softer Q1 growth but maintaining the view that the underlying outlook has not materially shifted.
The Bank continued to characterize the economy as operating with excess supply even alongside an expected rebound in near-term activity. Overall today’s decision largely reaffirmed the Bank’s existing assessment and policy stance.
Bank of Canada's Output Gap Estimate
Source: Bank of Canada, Macrobond
As of April 29, 2026
LOOKING THROUGH ENERGY’S IMPACT ON INFLATION
A key message from today’s decision is that the BoC is continuing to look through the near-term increase in headline inflation driven by higher energy prices, placing greater emphasis on underlying price trends.
Governor Macklem was explicit that current policy is being guided less by headline inflation and more by whether higher energy prices begin to spill over into other components of the consumer price index.
This reflects the Bank’s view that the current backdrop differs from prior inflationary episodes. With the economy operating in excess supply, firms face greater constraints in passing through higher input costs, reducing the risk of generalized inflation pressures.
As a result, the Bank is focused on measures of core inflation and inflation expectations as the key signals of whether price pressures are broadening.
Canada Inflation
Source: Statistics Canada, Macrobond
As of May 19, 2026
WHAT’S NEXT?
The policy path will depend on how incoming data shapes the outlook. With the economy still operating in excess supply, the Bank has scope to remain patient as it assess how conditions evolve.
Governor Macklem emphasized that the key trigger for policy action is whether energy prices spill over into broader inflation.
For now, the BoC appears comfortable maintaining its current stance as it awaits clearer signals related to underlying inflation dynamics.
To open this article in a shareable format, click here.
About the Author
Neil Shankar is CI Global Asset Management’s Economist, responsible for monitoring key macroeconomic trends and shaping CI GAM’s economic outlook. He actively participates in investment and asset allocation discussions, helping guide decision-making.
A leading contributor to CI GAM’s Capital Insights publication, Neil shares in-depth perspectives on evolving economic conditions. He also frequently engages with stakeholders throughout the organization and externally, helping to deepen understanding of the economic landscape. He is regularly quoted in the press for his views on the economy and markets.
With over 10 years of industry experience, Neil joined CI GAM in 2024 after holding similar roles at other major Canadian financial institutions. Neil holds an MA in Business Economics from Wilfrid Laurier University and a BA (Honours) in Economics from The University of Western Ontario.
IMPORTANT DISCLAIMERS
This document is provided as a general source of information and should not be considered personal, legal, accounting, tax or investment advice, or construed as an endorsement or recommendation of any entity or security discussed. Every effort has been made to ensure that the material contained in this document is accurate at the time of publication. Market conditions may change which may impact the information contained in this document. All charts and illustrations in this document are for illustrative purposes only. They are not intended to predict or project investment results. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies.
The opinions expressed in the communication are solely those of the author(s) and are not to be used or construed as investment advice or as an endorsement or recommendation of any entity or security discussed.
Certain names, words, titles, phrases, logos, icons, graphics, or designs in this document may constitute trade names, registered or unregistered trademarks or service marks of CI Investments Inc., its subsidiaries, or affiliates, used with permission. All other marks are the property of their respective owners and are used with permission.
Certain statements contained in this communication are based in whole or in part on information provided by third parties and CI Global Asset Management has taken reasonable steps to ensure their accuracy. Market conditions may change which may impact the information contained in this document.
Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe” or “estimate” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what CI Global Asset Management and the portfolio manager believe to be reasonable assumptions, neither CI Global Asset Management nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.
CI Global Asset Management is a registered business name of CI Investments Inc.
© CI Investments Inc. 2026. All rights reserved.
