Will the Bank of Canada Cut Rates on March 18?

For many Canadians struggling with mortgages, lines of credit, and credit cards, there are indications that the Bank of Canada (BoC) may cut rates. But is this belief grounded in reality or hope?

Conversely, some anticipate a rate hike, citing the rising oil prices resulting from the totally unprovoked attack on Iran by America and Israel.

In the middle are those who believe the BoC is more likely to maintain, or hold, the current rate.

Which viewpoint is more accurate?

Those Expecting a Hike: The BoC’s monetary policy primarily aims to keep inflation near 2%. However, rising oil prices, exacerbated by the ongoing war against Iran, could drive inflation up. This situation might prompt the BoC to consider raising rates.

Possibility of a Hold: If the rise in oil prices proves temporary and doesn’t lead to sustained inflation, the Bank may opt to wait for more data, potentially keeping rates unchanged. Most economists participating in a Reuters poll suggest that the Bank’s decision will depend on how long the oil price surge lasts and its effects. A supporting factor for maintaining rates is Canada’s status as a net oil exporter, which may buffer its economy against fluctuations in global crude prices, which have soared nearly 70% in the past week.

Arguments for a Rate Cut: Those expecting a cut have good reasons for their optimism. If growing uncertainty from U.S. trade policies and the resulting economic slowdown aren’t convincing enough for the BoC, the job report released earlier this week by Statistics Canada should be.

Key Features of the Job Report: 

–            Job Losses: Canada faced a loss of 84,000 jobs in February, a significant decline in the labor market.

–            Unemployment Rate: The unemployment rate increased to 6.7%, signifying a rise in joblessness.

–            Job Loss by Age Group: Youth aged 15 to 24 accounted for 47,000 job losses, while men aged 25 to 54 lost 41,000 positions.

–            Industry Impact: The most substantial job losses were seen in wholesale and retail trade, construction, and manufacturing.

–            Employment Rate: The employment rate fell to 60.6%, just slightly above the recent low of 60.5% observed in August 2025.

Expert Opinions:

o   BMO Economics: The Bank described the most recent job report as “one of the worst (non-pandemic) months ever for jobs.” If this report accurately reflects underlying economic conditions, a rate hike is unlikely, they noted.

o   Desjardin: The Bank indicated that “policymakers will look past rising oil prices when deciding to hike or hold” and focus on weaknesses in the labor market and housing sector. Elevated interest rates and uncertainty surrounding U.S. tariffs have deterred potential homebuyers, and cutting interest rates could help change that.

o   CIBC: According to CIBC, the job data is “clearly very worrisome for the BoC.” It reflects increased labor market slack and stagnant activity amid trade uncertainty. If the Bank of Canada decides to act, a cut is more probable, they added. The Bank also estimated that the unemployment rate could reach 9% if discouraged workers, those who have given up on job applications, are included.

Now we await March 18 to tell us who was right. 

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