The Bank of Canada left interest rates unchanged at 2.25 per cent on Wednesday as the Iran war rattles economies around the world.
Oil prices have spiked in recent weeks as the Strait of Hormuz puts about 20 per cent of the world’s oil supply in jeopardy, which risks higher prices for fuel and just about everything else.
The Bank of Canada said in a statement that the war has “heightened the risks to the global economy,” and the full impact will depend on how long the conflict goes on for and how severe it becomes.
“Since the outbreak of the conflict in the Middle East, global oil and natural gas prices have risen sharply, and this will boost global inflation in the near-term,” said the Bank of Canada in the statement.
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“In addition to energy supply disruptions, transportation bottlenecks stemming from the effective closure of the Strait of Hormuz could impact the supply of other commodities, such as fertilizer.”
This marks the second rate announcement from the central bank in 2026, and the third straight rate hold since it delivered a cut of 0.25 percentage points in October 2025.
Interest rates set by commercial banks and other lenders for loans like mortgages are based on the Bank of Canada’s minimum benchmark.
“We will continue to assess the impact of U.S. tariffs and trade policy uncertainty, and how the Canadian economy is adjusting. We are also monitoring the unfolding conflict in the Middle East closely and assessing its impact on growth and inflation,” said the Bank of Canada.
“As the outlook evolves, we stand ready to respond as needed. The Bank is committed to ensuring that Canadians continue to have confidence in price stability through this period of global upheaval.”
Bank of Canada Governor Tiff Macklem is scheduled to deliver remarks and answer questions at a press conference beginning at 10:30 a.m. EST.
– More to come
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