Bank of Canada holds key interest rate at 2.25%, flags US trade uncertainty and Iran war risks

The Bank of Canada decided to keep its benchmark interest rate parked at 2.25% on April 29, choosing to sit tight while two massive wildcards, the Iran conflict and US trade tariffs, continue to cloud the economic picture.

Governor Tiff Macklem made clear that the central bank isn’t married to either direction. The BoC is prepared to cut or hike rates depending on how these external shocks play out.

Two crises, one rate decision

The Bank of Canada is staring down two problems that pull in opposite directions.

On one side, the conflict in Iran has sent global oil prices surging since February 2026. That’s pushing inflation higher, the kind of pressure that typically calls for rate increases. Disrupted shipping routes and spiking energy costs are feeding into consumer prices across the board.

On the other side, US tariffs continue to weigh on Canadian exports and domestic growth. The BoC explicitly flagged American trade policy as detrimental to the Canadian economy, with an outlook dependent on the stability of those tariffs.

The next scheduled rate decision lands on June 10, 2026.

What the rate hold means in context

The BoC first held at 2.25% during its March 18 meeting, making this the second consecutive hold at this level.

Macklem’s comments reinforced uncertainty about the path forward. He pointed to heightened market volatility, disrupted global supply chains, and a lowered growth outlook for Canada as factors complicating the decision.

What this means for crypto and risk assets

The BoC’s stance matters because if the bank eventually cuts to support growth, that would likely weaken the Canadian dollar. If it hikes to combat energy-driven inflation, tighter financial conditions could pressure speculative assets.

The bank’s ongoing exploration of a central bank digital currency adds another dimension to watch. While the CBDC project hasn’t produced a concrete launch timeline, the BoC continues to study digital currency infrastructure during this period of significant monetary policy uncertainty.

For investors positioning ahead of the June 10 decision, the key variables to monitor are oil price trajectory, any escalation or de-escalation in the Iran conflict, and signals from Washington on trade policy.

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