Economic activity within the country remains tepid, with first-quarter GDP contracting by 0.1% despite a modest 1.4% uptick in consumer spending. Business investment and housing activity continue to struggle, while the labor market shows little meaningful momentum, with the unemployment rate hovering between 6.5% and 7%. The most recent data for May placed unemployment at 6.6%.

Global pressures, particularly the four-month conflict in the Middle East, have disrupted supply chains and kept oil prices approximately $10 per barrel above the bank’s previous projections. Although the Governing Council expects total inflation to linger near 3% in the near term, officials noted limited evidence that higher energy costs are currently bleeding into broader consumer prices. The central bank anticipates a gradual return to its 2% target, even as it navigates a landscape of volatile bond yields and a softened Canadian dollar. Following the announcement, the USD/CAD pair traded at 1.3616, while gold prices in Canadian terms dipped by 2.09% to $5,818.09 per ounce.