The Bank of Canada left its key overnight lending rate unchanged at 2.25% again on Wednesday, indicating that officials are somewhat comfortable with the economy despite ongoing uncertainty and economic weakness.

It marked the fifth straight rate hold, with the overnight rate remaining at 2.25% since October 29 after four cuts in 2025 aimed at supporting an economy weakened by U.S. tariffs.

“Big picture, not a great deal really has changed since our last decision,” BoC Governor Tiff Macklem told reporters during a news conference in Ottawa.

Commercial real estate and finance leaders took the BoC’s continuing hold policy in stride.

Mitch Strohminger, economist and director of market analytics at CoStar, told Connect that he and his colleagues were not surprised by the decision.

“The economy is still pretty weak,” he said.

“And there’s obviously some issues with regards to inflation being a bit more elevated than they than they would want, given the Middle East, recent food-price inflation, the ongoing uncertainty around trade and things like that. So I think that the bank is in a bit of a difficult spot, because they have to at one point, balance the fact that growth is slow. And at the other hand, inflation is thicker than what they would want.”

Some commercia real estate investors, developers and occupiers may want to pause their activities, he added. But Strohminger does not believe that will be the case.

“I think the consensus among most economists and, certainly, the base case scenario for the Bank of Canada is that we’re likely to have higher inflation for the next few months, likely above 3%,” he said. “And then that should eventually start to trend downwards to the 2% target by the end of this year or early next. That’s that’s sort of the base-case scenario that the bank is working with.

“And, I think, if you’re a commercial real estate investor, you invest for the long haul, and so you’re going to look at other things being current interest rates.”

Broadly speaking, he added, CRE activity as the industry becomes used to the ongoing rate holds, he added, noting that deals have increased in recent months.

“We’re seeing a pick-up in activity, and I think that’s going to continue,” he said. “[BoC officials] did, obviously, mention that you still live in uncertain times. And you read the press releases they put out, there’s still a lot of scenarios and a lot of different ways things could play out. But having said that, I think that they’re kind of comfortable with that uncertainty, if you will.

“And, the economy, even though we had some slow growth postings recently, one could make the argument that the economy has held up pretty well, given the fact that we have this trade uncertainty with our largest trading partner and the recent shock with petrol prices.

“I think the bank is, indeed, a little bit more comfortable with the uncertainty and making decisions going forward.”

Andrew Graham, a senior economist at CIBC, said in a research note that Wednesday’s announcement highlight’s “a very patient central bank that has plenty of time to wait and see how risks to the economy play out.”

“We continue to see no change in interest rates this year, and that rates at their current level should support a recovery in the economy later this year and into 2027, assuming some of the uncertainties regarding oil prices and trade lessen during that time period,” he said.

Andrew Hencic, director and senior economist at TD Bank, said the continued hold demonstrates how much slack there is in the Canadian economy after early 2026 economic growth was slower than expected.

“This slack is expected to continue to help offset the inflation pressures coming from higher energy costs,” he said in a research note provided to Connect. “Whether it is sufficient to prevent broader pass-through to core prices is likely to depend on just how long oil prices stay elevated.”

He added that the outlook remains highly uncertain as oil prices remain high after coming off their peaks and uncertainty about the course of the Middle East conflict remains uncertain. The failure to start renegotiating the Canada-U.S.-Mexico trade agreement has also cast a “pall over trade prospects.”

“Recent data suggest a second quarter bounce-back in growth, but one that is insufficient to absorb all of the excess capacity in the economy. Given the competing forces on inflation, we expect the Bank of Canada to stay on hold through the balance of the year.”

In its rate announcement, the BoC said there has been “limited evidence of broad-based pass-through of higher energy prices to other consumer prices.”

“Governing Council is continuing to look through the war’s near-term impact on headline inflation but will not let ​higher energy prices become persistent inflation.”

Macklem indicated that the Bank will not hesitate to change its rate stance should conditions necessitate a revised position.

Pictured: Bank of Canada Governor Tiff Macklem

Photo: University of Toronto

Canada’s commercial real estate market is evolving fast—be in the room where it all comes together. On June 25 in Toronto, Connect CRE Canada brings together the leaders actively shaping the market. Join an influential audience of 200 investors, developers, brokers, lenders, and owners for high-level networking and timely discussions on the trends impacting today’s market. Hear from leaders at TD Asset Management, Starlight, Woodbourne Capital Management, REMAX, Fengate Asset Management, Stonebridge Financial, Yardi, and more. Register today to stay ahead of the market and build valuable industry connections.

If you’re making investment, development, or lending decisions in today’s Canadian commercial real estate market, Connect CRE Canada in Toronto on June 25 is where you need to be. Join an audience of 200 investors, lenders, brokers, developers, and owners for high-level networking and timely discussions on the trends impacting today’s market. Hear from industry leaders at TD Asset Management, Starlight, Woodbourne Capital Management, REMAX, Fengate Asset Management, Stonebridge Financial, Yardi, and more. Register now to gain the insights and connections to navigate an evolving landscape.