The Bank of Canada, Canada's Central Bank, said on the 18th (local time) after a currency policy meeting that it kept the overnight rate, used as the policy rate, unchanged at 2.25%.
After the rate decision, the Bank of Canada said in a statement, "Oil and natural gas prices, which have surged due to the Middle East war, will raise global inflationary pressures in the short term," adding, "Transport bottlenecks caused by the closure of the Strait of Hormuz will also affect supplies of other raw materials such as fertilizer."
At the same time, it said recent indicators point to a slowdown in economic activity and that, with risks to growth tilted to the downside, higher energy prices have increased inflation risks.
Tiff Macklem, governor of the Bank of Canada, said, "Rising inflation coupled with a weakening economy presents a dilemma for the Central Bank," explaining, "If we raise rates to curb inflation, we could further depress the economy, and if we cut rates to support growth, there is a risk of significant inflation."