The Bank of Canada indicated in its interest rate statement that the prevailing level of borrowing costs remains suitable for sustaining the economic recovery and steering inflation back to the 2% target.

The central bank stated that its Governing Council will persist in evaluating economic performance and inflation prospects, standing ready to adjust monetary policy as needed.

In its Monetary Policy Report, the Bank projected second-quarter economic growth at an annualized rate of 2.5%, with third-quarter growth anticipated at 1.5%.

While a weak start to the year led policymakers to revise down the 2026 economic growth forecast to 0.7%, the forecasts for both 2027 and 2028 were raised to 1.8%.

The Bank of Canada expects the overall inflation rate to average 2.5% in 2026, which is higher than the previous forecast of 2.3%, and anticipates a return to the 2% target by early next year.