Written By
Nick Raffoul
Nick Raffoul is the Founder and Lead Analyst at Best Canadian Stocks. He graduated with a degree in Business Administration, has over a decade of writing experience, and grew his personal portfolio 153% from 2020 to 2024.
The Bank of Canada’s next interest rate decision lands on June 10, 2026, and bond markets are pricing in a very high probability of no change. The overnight policy rate currently sits at 2.25%, where it has been held steady for four consecutive decisions. Here’s why another hold looks likely — and what it means for Canadian investors.
Core Inflation Is at Target
April’s headline Consumer Price Index came in at 2.8% year-over-year, which initially looks like it might push the Bank of Canada toward holding or even reconsidering cuts. But the story changes when you look under the hood. The entire acceleration was driven by energy prices, which surged 19.2% year-over-year, with gasoline up 28.6%.
Strip out gasoline, and the CPI was running at just 2.0% year-over-year in April — right on the Bank of Canada’s target. According to TD Economics, the BoC’s preferred core inflation measures — median and trim — averaged 2.1% in April, down from 2.3% in March. That’s the key metric central bankers watch, and it’s trending in the right direction.
Data as of May 20, 2026. Source: Statistics Canada and TD Economics.
Bond Markets Aren’t Pricing a Cut or a Hike
Bond markets are currently pricing in a roughly 1% implied probability of a 25 basis point cut at the June 10 meeting. That’s effectively zero. There’s also no material probability of a hike priced in. The market consensus is clear: the Bank of Canada is staying at 2.25%.
The BoC’s focus remains keeping inflation within the 2% target range, and with core measures averaging 2.1%, that goal is essentially achieved. The April inflation spike was a supply-side energy shock, not a demand problem, and central banks typically look through temporary commodity price moves.
What a Stable Rate Path Means for Canadian Investors
If you’re building a TFSA or RRSP portfolio, a stable rate environment is good news. Rate-sensitive sectors like dividend stocks and real estate investment trusts benefit when the central bank isn’t hiking. With the BoC holding steady and core inflation under control, current dividend yields on quality Canadian dividend payers remain attractive.
For beginner investors, now is a reasonable time to open a TFSA and start building a long-term passive ETF or dividend portfolio. With rates stable and yields looking attractive, you’re not fighting against a tightening cycle. For a complete breakdown of the best accounts for Canadian investors, check out our guide to the best investing apps in Canada.
If you’re deciding between a TFSA and an RRSP, our guide to the best TFSA stocks for Canadian investors can help you think through the tax implications and portfolio strategy.
Why the BoC Won’t Cut Yet
Some investors might wonder why the Bank of Canada wouldn’t cut rates if core inflation is at 2.1%. The answer is straightforward: inflation is at target, not below target. The BoC’s mandate is to keep it there, not to undershoot — so with core sitting essentially on the 2% objective, there is no clear case for easing further from current levels.
As a general rule, central banks ease policy when inflation falls well below target or when growth weakens materially. The April CPI print on its own does not push the data toward either threshold — headline ran above target only because of an energy shock, and the BoC’s preferred core measures eased rather than accelerated. That keeps the wait-and-see stance intact.
Bottom Line for Investors
The June 10 Bank of Canada decision is highly likely to be a hold at 2.25%. Core inflation is at target, bond markets aren’t pricing in any change, and the BoC has no compelling reason to move rates in either direction. For Canadian TFSA and RRSP investors, that stable rate path supports current dividend yields and long-term portfolio building.
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Written By
Nick Raffoul
Nick Raffoul is the Founder and Lead Analyst at Best Canadian Stocks. He holds a degree in Business Administration and has over a decade of writing experience. Nick began investing just before the COVID-19 market crash in March 2020, growing his personal portfolio 153% by 2024. In 2022, he founded Best Canadian Stocks to make data-driven investing accessible to all Canadians. His goal is to help all of his readers achieve financial freedom, maximize their spending power, and reach their financial goals. Whether you're maximizing your TFSA, building an RRSP to save for retirement, or looking to buy your first stock, Nick has your back. His work covers Canadian equities, dividend investing, tax-advantaged accounts, and personal finance.
