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Oil up, rates frozen: why the Bank of Canada held at 2.25%

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War in the Middle East pushed oil higher, gas prices rose, and the Bank of Canada held rates at 2.25% on June 10. What it changes for your wallet.

Look, here’s the deal. There’s one number that will decide your cost of living in Canada over the next few months, and it isn’t rent or the exchange rate, it’s the price of a barrel of oil. War in the Middle East pushed oil higher, you already felt it at the gas pump, and on June 10 it landed on a specific table: the Bank of Canada’s, which decided to hold the interest rate at 2.25%, the fifth straight hold. Let me connect these dots, because they explain why your mortgage, your rent, and your purchasing power are all caught in the same knot.

Why did gas get more expensive in Canada in 2026?

Because of a war 10,000 kilometres away. The attacks on energy infrastructure and the disruptions in the Strait of Hormuz, through which about 35% of all the world’s seaborne oil passes, caused what the World Bank calls “the largest oil supply shock on record”. The result: the World Bank projects energy prices 24% higher in 2026, the highest level since Russia’s invasion of Ukraine in 2022. Brent crude should average USD 86 a barrel in 2026, against USD 69 in 2025.

This doesn’t stay in the international news, it reaches your life. Expensive oil means expensive gas, and expensive gas doesn’t stop at the pump: it raises shipping costs, and shipping costs raise the price of what arrives at the grocery store and what heats your home in winter. The Bank of Canada was direct in its April statement: inflation (CPI) rose to 2.4% in March precisely because of the sharp rise in gas prices.

What does oil have to do with your rent and your salary?

Everything, by an indirect but concrete route: the interest rate. There’s a rule of thumb Scotiabank uses that is worth keeping: a sustained USD 10 rise in the barrel tends to push Canadian inflation up by somewhere between 0.3 and 0.4 percentage point over the following year. Higher inflation means your salary buys less and the Bank of Canada has less room to cut the rate.

And the interest rate is what determines whether your mortgage gets cheaper or not. After two years of cutting, the Bank stopped, and, as I showed in the Q1 GDP analysis, what Canadian households pay in interest is rising again. For anyone calculating whether to buy a house in 2026, or negotiating the renewal of a rent in a building whose owner also feels the cost of debt, the price of the barrel out there is what moves the piece in here.

What did the Bank of Canada decide on June 10?

It held the rate where it was, 2.25%, for the fifth straight meeting, and the reason is a standoff. On one side, the economy is weak: GDP was 0.0% in the first quarter, and the Bank itself projects growth of only 1.2% in 2026. A weak economy normally calls for a rate cut to stimulate.

On the other side, expensive gas pushes inflation up, and the Bank doesn’t cut the rate with inflation rising. That’s the knot: the economy calls for a cut, oil prevents it. Governor Tiff Macklem gave the clue on how the Bank reads the situation: so far there is little evidence of broad pass-through from expensive energy to other prices, and that is exactly what he’ll be watching until the next meeting. There’s one detail worth following closely: in its base case, the Bank of Canada bets the barrel falls back to USD 75 by mid-2027. The World Bank sees the high price persisting. Whoever is right about oil decides your rate.

What does this change for a Brazilian arriving in or living in Canada?

It changes your financial planning, on three fronts. First: don’t build your budget counting on a rate cut that may not come. A lot of people waiting to buy a house are betting on a rate drop in 2026, and expensive oil can delay that drop. If your numbers only add up with the rate falling, they don’t add up.

Second: expect the cost of living to stay under pressure for a few more months. Gas, groceries, and heating move together when oil rises. For anyone who just arrived and is building a first budget, I’d leave a bigger cushion than the spreadsheet suggests, because the spreadsheet was built with yesterday’s prices.

Third: follow the Bank of Canada’s decisions the way you’d follow an Express Entry round. The June 10 one confirmed the standoff, rate frozen at 2.25%, and the next meeting will tell whether the “limited pass-through” Macklem cited stays limited. That decision doesn’t make headlines in Brazil, but it directly affects your mortgage and, indirectly, your rent. Knowing what to expect before signing a contract is the kind of advantage that costs nothing and that almost nobody uses.

What would I do in your place?

I’d plan for the scenario where the rate stays frozen longer than the market would like. Not because I’m rooting for it, but because oil is the wild card, and as long as the war in the Middle East keeps the barrel expensive, the Bank of Canada has no room to ease, even with the economy asking for it. If the barrel falls back as the Bank bets, great: the rate drops, the mortgage eases, you lost nothing by being conservative. If the barrel stays expensive as the World Bank projects, you’re the one who arrives prepared. In immigration planning, erring on the cautious side costs little; erring on the optimistic side costs the whole budget.

Frequently asked questions

What is the Bank of Canada interest rate in June 2026?
The policy rate is 2.25%. In its June 10, 2026 decision the Bank of Canada held the rate for the fifth straight meeting, balancing inflation pressure from expensive oil against a weak economy. Governor Tiff Macklem noted that, so far, the pass-through from expensive energy to other prices is limited.
Why did oil rise so much in 2026?
Because of the war in the Middle East. Attacks on energy infrastructure and disruptions in the Strait of Hormuz, through which about 35% of the world's seaborne oil passes, caused what the World Bank calls the largest oil supply shock on record. The World Bank projects energy prices 24% higher in 2026, with Brent averaging USD 86 a barrel.
How does the oil price affect inflation in Canada?
Expensive oil raises gas prices, which raise shipping costs, which raise groceries and heating. According to a Scotiabank estimate, a sustained USD 10 rise in the barrel tends to push Canadian inflation up by 0.3 to 0.4 percentage point over the following year. It was gas that took March inflation to 2.4%, according to the Bank of Canada.
Will the Bank of Canada cut the rate in 2026?
It's uncertain, and oil is the decisive factor. The weak economy (1.2% GDP projected for 2026) calls for a cut, but inflation driven by gas prevents it. The Bank bets the barrel falls back to USD 75 by mid-2027; the World Bank sees the high price persisting. Whoever is right about oil determines the pace of the cuts.
Is it worth buying a house in Canada now or waiting for the rate to fall?
The data calls for caution. Don't build your budget counting on a rate cut that may not come, expensive oil can delay the drop, and the June 10 decision confirmed it: rate frozen at 2.25% for the fifth straight time. If your numbers only add up with the rate falling, they still don't add up.

Sources

On June 10, 2026 the Bank of Canada held the rate at 2.25%, for the fifth straight meeting. The inflation (CPI) and labour market data that feed the next decision come out, for free, in Statistics Canada’s The Daily.

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