The Bank of Canada today held its target for the overnight rate at 2.25%, with the Bank Rate at 2.5% and the deposit rate at 2.20%.

Canada’s economy has been weak but is showing signs of improvement. Growth is expected to pick up, and inflation is projected to ease to around 2%. Uncertainty remains elevated.

Governor Tiff Macklem discusses the Monetary Policy Report and the key issues involved in the Governing Council’s deliberations about the monetary policy decision.

Results from the Business Outlook Survey and the Business Leaders’ Pulse indicate that firms’ sentiment has deteriorated. Domestic sales outlooks have weakened amid heightened geopolitical uncertainty and elevated costs related to fuel, while export outlooks have improved because of stronger demand for commodities. Investment intentions remain solid, but fewer firms plan to add staff. More firms now expect their input and selling prices to rise, reflecting higher global oil prices. Firms’ inflation expectations are also higher than in recent quarters. Oil producers have revised their capital spending and production plans upward, citing expectations of sustained elevated oil prices.