Why is the Bank of Canada likely to hold its benchmark policy rate at 2.25% in its upcoming meeting?

The Bank of Canada is likely to hold its benchmark policy rate at 2.25% because policymakers are weighing persistent uncertainty about oil prices—amplified by the US reimposition of a blockade on the Strait of Hormuz—against an improving economic backdrop, including recent job gains and a softening labor market; although rising gasoline prices pushed headline inflation to 3.2% in May, core inflation remains near the 2% target, and officials view both rate hikes and cuts as less likely until there is greater clarity on energy price direction and inflation persistence.

What does the Bank of Canada's 'dilemma' refer to, and how has the Middle East situation affected it since the last decision?

The Bank of Canada's 'dilemma' refers to balancing inflation risks from higher energy prices against ongoing economic weakness; since the last decision, the fragile Middle East peace effort collapsed as the US reimposed a blockade on the Strait of Hormuz, reversing earlier oil price declines (Brent crude rose from $85 to $90 then back to $85) and reintroducing upside inflation risks, leaving officials without a solid read on energy cost direction and thus maintaining caution.