Bank of Canada Expected to Keep Rates Unchanged as GDP Tracks Modest Growth

RBC expects the Bank of Canada to keep policy rates unchanged at its upcoming meeting (a fourth consecutive hold) as Q1 GDP tracks modest growth and labour conditions stabilize. Rising energy and gasoline prices are likely to push headline CPI above the BoC’s 1–3% target range in April, but RBC argues those are supply-driven and not actionable via domestic rates. The report expects real GDP to have risen 0.2% in February and Q1 growth to track between RBC’s 1.3% annualized forecast and the BoC’s 1.8% projection. The U.S. Fed is also expected to remain on hold, with core PCE running near 3.2% YoY. Market impact: persistent oil-driven inflation could keep downside pressure on the Canadian dollar if price-driven CPI surprises continue, supporting upside in USDCAD; meanwhile central banks’ pause argues for limited near-term policy-driven volatility in FX and interest-rate-sensitive assets.