The Bank of Canada is anticipated to maintain its benchmark interest rate at 2.75 per cent during its upcoming policy meeting, according to a Reuters poll of economists. This decision follows stronger-than-expected economic growth in the first quarter, with GDP rising at an annualized rate of 2.2%, primarily driven by exports ahead of impending U.S. tariffs

Despite the robust GDP figures, domestic demand remains weak, and household spending has declined, suggesting potential economic headwinds. Economists predict at least two more rate cuts by the end of the year to support the economy amid these challenges

Core inflation continues to hover near the upper limit of the Bank's 1–3 per cent target range, adding complexity to the central bank's decision-making process. While some economists from major banks like BMO, CIBC, and TD have revised their forecasts from a rate cut to a hold, the consensus indicates further easing may be necessary if economic conditions deteriorate reuters.com

The Bank of Canada has already reduced rates by a cumulative 225 basis points since June 2024. Policymakers are expected to wait for the July economic outlook before implementing additional changes, as uncertainties, including the impact of U.S. tariffs, continue to influence the economic landscape.