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Central bank · Canada·CAD

Bank of Canada

The Bank of Canada sets monetary policy via the Governing Council, meeting 8 times per year. Track the Overnight Rate target, Monetary Policy Report, Macklem statements and how BoC moves drive USD/CAD and crude-linked flows.

Policy rate
2.75%
Overnight Rate Target
Effective
2026-04-16
Next meeting
2026-06-04
Cadence
8 times per year
TL;DR

The Bank of Canada was one of the earliest G10 cutters in the 2024 cycle. Overnight Rate is the policy anchor. The Monetary Policy Report (4 of 8 meetings) drives biggest market reactions. BoC decisions heavily influenced by crude oil prices and US Fed coordination.

About the BoC

The Bank of Canada was established in 1934 and gained explicit inflation-targeting framework in 1991. Headquartered in Ottawa. Monetary policy is set by the Governing Council — 6 members including the Governor + Senior Deputy Governor + 4 Deputy Governors. The Council operates by consensus rather than voting.

The BoC's mandate is to promote the economic and financial welfare of Canada via inflation targeting at 2% CPI (midpoint of 1-3% band). The 2-year inflation target is renewed every 5 years with the federal government, last in 2021 for the 2022-2026 period.

The Overnight Rate Target is the policy rate. CORRA (the CAD overnight reference rate) trades within +/-25bp of the target. The BoC operates a floor system since 2020 — paying interest on reserves at the policy rate to anchor short-term CAD rates. QE/QT operates alongside.

Mandate & framework

Framework
Inflation targeting: 2% CPI midpoint of 1-3% band
Inflation target
2% CPI midpoint of 1-3% band

What drives BoC policy

  • Core CPI measures (BoC publishes three: CPI-trim, CPI-median, CPI-common) — composite read on underlying inflation.
  • Wage growth via the Labour Force Survey (LFS) and SEPH payroll data.
  • Unemployment rate and labour market slack.
  • Crude oil prices (WTI and Western Canadian Select) — CAD's largest export commodity.
  • US monetary policy — the BoC tracks the Fed closely given US is Canada's dominant trading partner (75% of exports).
  • Monetary Policy Report (4 of 8 meetings per year) with full forecasts.

Recent actions

2026-04-16
Cut Overnight Rate by 25bp to 2.75% from 3.00% as inflation eased to 2.1%
2025-12-11
Cut by 25bp to 3.00% from 3.25%
2025-09-04
Cut by 25bp to 3.25% from 3.50%
2024-06-05
Started cutting cycle with 25bp to 4.75% — first G7 cut of the cycle
2023-07-12
Last hike to 5.00%, the cycle peak

People also ask

What is the Bank of Canada?

Canada's central bank, established 1934. Explicit inflation-targeting framework since 1991 — one of the earliest adopters globally. Sets monetary policy via the 6-member Governing Council (consensus, not voting). Headquartered in Ottawa.

When does the BoC meet?

The Governing Council meets 8 times per year. Decisions are announced at 13:45 UTC (09:45 Ottawa) on Wednesdays. Press conferences follow at 14:30 UTC. Four meetings (January, April, July, October) include the Monetary Policy Report (MPR) with full forecasts — the highest-impact events.

What is the Overnight Rate?

The Bank of Canada's policy rate target. CORRA (the CAD overnight reference rate) trades within +/-25bp of the target. The BoC operates a floor system, paying interest on reserves at the policy rate to anchor short-term CAD rates.

How does the BoC affect USD/CAD?

Hawkish BoC signals widen the BoC-Fed spread, weakening USD/CAD (CAD strengthens). Dovish signals lift USD/CAD. The 2Y Canada-US bond spread is the cleanest leading indicator. Crude oil prices overlay the rate signal via the commodity-export channel.

Why does crude oil affect CAD?

Oil and energy products are ~25% of Canadian merchandise exports. WTI crude and Western Canadian Select (WCS) prices feed directly into Canadian trade balance and corporate earnings. When crude rallies, CAD typically strengthens; when it falls, CAD weakens.

Does the BoC coordinate with the Fed?

Not formally, but Canada-US economic and trade integration (75% of Canadian exports go to US) means BoC decisions implicitly track Fed direction. The BoC has historically led the Fed in some cycles (2024 cuts) and followed in others. Decoupling produces FX volatility in USD/CAD.

Who is the BoC Governor?

Tiff Macklem, in role since June 2020, succeeding Stephen Poloz. Career central banker and academic. Has navigated COVID emergency policy, the 2022-23 tightening cycle, and the 2024-26 cutting cycle as G7 cycle leader.

FX pairs affected by BoC policy

Primary sources