Bank of Canada (Jun) Little change to forward messaging

Research evidence excerpt

Bank of Canada (Jun) Little change to forward messaging

10 June 2026

Bank of Canada (Jun) Economics

Little change to forward messaging Canada

◆ Bank of Canada kept rates on hold at 2.25%, as widely expected… Bethan Ellis

Global Economist

◆ …today’s decision followed a weak set of Q1 growth numbers, though recent HSBC Bank plc bethan.ellis@hsbc.com

data show an improvement in the labour market… +44 20 7991 6714

◆ …with limited sign of broadening price pressures, we expect Bank of Canada

to keep policy rates on hold this year

Facts

The Bank of Canada kept policy rates on hold at 2.25%, as expected. Messaging was not much altered

from April’s meeting, with the opening statement re-iterating that “Governing Council agreed to look

through the war’s near-term impact on inflation but if energy prices stay high, we will not let their effects

become broad-based persistent inflation”.

Alongside this, the opening statement said that there has been “limited evidence of broad-based pass-

through of higher energy prices”. We’re inclined to agree. Bank of Canada measures of core inflation

(chart 2) have generally been moving closer toward 2%, and May’s labour market data showed a

deceleration in wage growth, to 3.0% y-o-y (from 4.5% y-o-y in April) – though this was partly due to an

increase in full-time hiring for lower paid positions.

One point worth noting in today’s statement is commentary on the Bank’s April economic projections. At

the time, we had noted that the oil assumptions used in April’s MPR were overly optimistic (USD90/bbl

average in Q2). And, the opening statement today did note that oil prices are about USD10/bbl higher than

they had assumed in April. As a result, the Bank of Canada now expects inflation to hover close to 3% in