Bank of Canada holds key rate at 2.25% as tariffs cloud outlook
The Bank of Canada has maintained its key interest rate at 2.25% as trade tensions with the United States and global energy prices create economic uncertainty. Governor Tiff Macklem noted that while new tariffs will impact specific sectors, the bank remains focused on ensuring price stability.
Why it matters
Monetary policy decisions in Canada directly affect inflation, consumer borrowing costs, and the country's economic resilience amid international trade disputes.
The Bank of Canada stuck to the sidelines Wednesday as governor Tiff Macklem suggested the re-escalating trade war with the United States is not the only risk monetary policymakers are monitoring. The central bank left its policy rate unchanged at 2.25 per cent for a seventh consecutive decision. The move was widely expected by economists. The bank has been watching to see whether cost pressures from the war in Iran could spread into other pockets of the consumer basket. Inflationary risks have only become sharper since the bank’s last decision in July, Macklem said Wednesday, with global oil prices still persistently high and no end in sight for the Middle East conflict. The economy meanwhile had been rebounding ahead of new U.S. tariffs hitting a range of Canadian goods as of Aug. 22. Canada is planning a round of retaliatory tariffs on Sept.
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