BoC Holds at 5.00% as CPI Cools to 2.7%, Unemployment Hits 5.8%; USD/CAD Braces for Volatility

Bank of Canada held its policy rate at 5.00% on May 1 amid cooling CPI to 2.7%, slowing GDP growth at 1.5%, and rising unemployment to 5.8%, shifting focus to Governor Macklem's guidance and Fed cues for USDCAD moves. The story began March 17 with economists expecting a hold due to energy-price shocks from the Iran war, featuring 50% oil surge and 30% gasoline jump. On March 18, Macklem cited weak economy to bide time. April 29 saw a hold at 2.25%, with CPI projected to peak near 3%, GDP at 1.2% for 2026 assuming oil falls to $75/bbl by mid-2027, and nimble policy on oil highs or US trade risks driving USD/CAD to 1.3711.