BMO Continues to See Bank of Canada on Hold This Year After Wednesday's Policy Statement Gives Very Little New Information

11:40 AM EDT, 06/10/2026 (MT Newswires) -- The Bank of Canada held policy rates at 2.25% on Wednesday, as expected, said Bank of Montreal (BMO).

The policy statement was matter-of-fact, with no big surprises, noted the bank. The BoC highlighted softer Q1 gross domestic product contracting 0.1% versus the 1.5% growth forecast in the April Monetary Policy Report, while the labor market picture has remained stable with the unemployment rate holding in the 6.5%-to-7% range.

The BoC expects growth to rebound in Q2, but "the economy is expected to remain in excess supply."

The section on inflation outlined the improvement in core consumer price index and that there has been little evidence of pass-through from high energy prices. Still, oil prices remain elevated and subject to headline volatility, which drives upside risk. The BoC will continue to look through the initial impact of energy prices on CPI, but "will not let higher energy prices become persistent inflation."

The final paragraph had a small dovish addition-"Economic activity in Canada has been weak and uncertainty about US trade policy persists." The first half of that sentence is new and likely due to the miss in Q1 GDP. The early indicators point to a rebound in the current quarter, but the economy has struggled to gain consistent momentum since trade concerns ramped up at the start of 2025.

Governor Tiff Macklem's opening statement repeated the potential scenario for a cut in the event of significant new trade restrictions from the U.S., and for "consecutive" hikes if inflation pressures broaden. These are still the risks, though it doesn't look as though the BoC is anywhere close to either scenario at the moment, added BMO.

Very little new information from the BoC, as the June policy statement and opening statement were similar to April's. The extra line about the economy being "weak" is a touch more dovish, but there's still concern about the potential for rising inflation from higher energy prices, according to the bank.

BMO continues to expect the BoC to stay on hold through the rest of the year.

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