ContextOpening statement by Tiff Macklem, Governor of the Bank of Canada and Carolyn Rogers, Senior Deputy Governor of the Bank of Canada, at the press conference following the monetary policy decision, Ottawa, Ontario, 10 June 2026.
Why it mattersThe Bank of Canada's June decision, explaining why it chose to look through the war's first effect on prices.
- The Middle East conflict slows activity and raises inflation worldwide.
- Canadian housing and business investment are weak.
- High energy prices could turn into persistent inflation.
- Hold the policy rate at 2.25%.
- Look through the war's near-term impact on inflation.
- Stop high energy prices from becoming broad-based inflation.
Read the speech summary
1. Rates on hold amid a stagflation dilemma
Presenting the 10 June decision, Bank of Canada Governor Tiff Macklem said the policy rate stayed at 2.25% as the Middle East conflict, higher energy prices and supply disruptions weigh on global growth and lift inflation, while US tariff uncertainty continues. Canadian GDP fell 0.1% in the first quarter, with consumer spending up 1.4% but government spending, housing and business investment weak; unemployment dropped to 6.6% but employment is little changed this year, and growth should resume in the second quarter while the economy stays in excess supply. CPI inflation rose to 2.8% in April on energy and the carbon-tax base effect, with no broad pass-through yet and core measures near 2%.
2. Risks and policy options
Oil is about ten dollars a barrel above the bank's assumption, so inflation should hover near 3% before easing toward 2%. Weak growth with rising inflation is a dilemma: raising rates could further slow the economy, easing risks entrenching inflation, so holding balances the risks. The bank will disregard the war's short-run impact but not let high energy prices become persistent inflation. If the US imposes major new trade restrictions, further cuts may be needed; if energy prices spread into generalised inflation, consecutive increases could follow. Structural shifts in trade, AI adoption and demographics complicate assessment.