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Bank of Canada to Keep Benchmark Rate at 2.75% on June 4

Solid first-quarter growth masks mounting core inflation, signaling a trade-driven slowdown ahead.

The Bank of Canada is set for an interest rate decision on Wednesday. Tiff Macklem, governor of the central bank, holds a press conference at the Bank of Canada in Ottawa on Wednesday, March 12, 2025. THE CANADIAN PRESS/Sean Kilpatrick
A view of the Bank of Canada building framed by tulips in Ottawa, Ontario, Canada May 8, 2025. REUTERS/Blair Gable/File Photo
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The Bank of Canada is seen in Ottawa, on Wednesday, April 16, 2025. THE CANADIAN PRESS/Justin Tang

Overview

  • A Reuters poll found 20 of 26 economists expect the Bank of Canada to hold its key rate at 2.75% at the June 4 announcement.
  • Statistics Canada reported a 2.2% annualized GDP gain in Q1 2025 driven by export stockpiling ahead of planned U.S. steel and aluminum tariffs.
  • Canada’s headline inflation fell to 1.7% in April after the carbon price removal, but core measures accelerated unexpectedly.
  • The unemployment rate rose to 6.9% in April as manufacturing shed around 31,000 jobs, indicating growing labour market weakness.
  • Despite the pause, markets and economists project at least two more quarter-point rate cuts this year with looming GDP contraction and tariff uncertainty.