Bank of Canada holds. Again, for the fifth time in a row.

The BoC openly calling this a “dilemma.” A weakening economy pulling one way, energy-driven inflation pulling the other. Raise rates and you hurt growth and economy. Cut rates and you risk inflation sticking around. So they’re holding and watching.

What they actually said: “If the United States imposes significant new trade restrictions on Canada, we may need to cut the policy rate further.” And in the other direction: “There may be a need for consecutive increases in the policy rate” if Middle East energy prices spread into broader inflation.

This is a lot of hedging language.

Translation:
A few months ago, the question was when cuts were coming. That’s no longer the question. The path forward depends on things the BoC has no control over: a war, and trade negotiations that aren’t close to settled. They were careful not to call it a recession (very careful), but “weak economy with excess supply” is just softer language.

For mortgages: No clear signal either way. Status quo is the most likely short-term outcome. Worth knowing: the BoC justifies its decisions on historical data, but that’s always looking in the rearview mirror. By the time the rate changes, the conditions driving it have usually been building for a while.

Next BoC date: July 15, Sept 2 US Fed Reserve: Jun 17 (expected rate hold), Jul 29