Bank of Canada holds rates at 2.25%, sees limited inflation spillover from energy prices

The Bank of Canada kept its overnight policy rate parked at 2.25% on June 10, marking the fifth straight meeting without a change. Governor Tiff Macklem acknowledged that energy prices, driven largely by the ongoing Middle East conflict, have climbed. But the central bank sees limited evidence of those costs bleeding into broader inflation.

The numbers behind the hold

Canada’s headline inflation hit 2.8% in April 2026. That’s above the BoC’s 2% target, but core inflation measures came in around 2.1%. The gap between headline and core tells a clear story: energy is doing the heavy lifting on price increases, not some systemic inflationary spiral.

The Bank Rate now sits at 2.5%, with the deposit rate at 2.20%. A Reuters poll of economists found broad consensus that the rate will hold through most of 2026.

Why energy prices haven’t triggered a broader response

The Middle East conflict has pushed energy costs higher, but Canadian businesses haven’t broadly passed those costs through to consumers in other categories. Macklem has underscored the bank’s readiness to adjust rates—either hiking them in response to rising energy prices or cutting them if the economy slows significantly due to external shocks, such as potential new U.S. trade restrictions under the USMCA.

The risk isn’t trivial. Canada’s economy is already contending with weak domestic activity and global uncertainties.

What this means for crypto and risk assets

For traders in the crypto market, the lack of direct links between the BoC’s decisions and crypto assets indicates that digital asset markets may continue to react primarily to traditional macroeconomic factors.

What investors should watch is the spread between headline and core inflation in Canada’s upcoming data releases. If core measures climb toward headline rather than headline falling toward core, it would suggest the BoC’s patience is being tested.

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