The Bank of Canada will reveal the central bank rate Wednesday morning and in advance of that the C.D. Howe Institute says the BOC should maintain the overnight rate at 2.25 per cent for the next six months.

The Institute’s Monetary Policy Council (MPC) is chaired by Jeremy Kronick, the Institute’s President and CEO, and includes the chief economists of the six largest Canadian banks as well as academic economists and financial market experts.

All nine MPC members in attendance called for the Bank of Canada to hold the overnight rate target at 2.25 percent until October of this year and raise it to 2.5 per cent by April 2027. Members highlighted uncertainty in the direction of the war in the Middle East and the upcoming review of CUSMA as two main drivers for holding the overnight rate target steady at this upcoming meeting and those in the near future.

The group pointed to closures of the Strait of Hormuz as affecting more than just the price of oil but also significantly impacting a host of other commodities, which have increased in price, creating a broader-based negative supply shock on both global economic growth and growth here in Canada.