The Bank of Canada finally admits rising oil prices affect overall consumer prices:

If current levels of energy prices persist, total CPI inflation will rise above 3 per cent later this year.

The bank conveniently focuses on “core” inflation which excludes the price of oil in its basket.

Holding the lending rate this morning was a surprise for some and a reversal from the previous six-month trend of interest rate cuts. Only a few months ago, the governor of the Bank announced an expansion of the money supply will be a strategy to stimulate the economy:

Further monetary stimulus is likely to be required in the near term to keep aggregate supply and demand in balance and to achieve the two per cent inflation target over the medium term.