On the heels of more talks of tariffs on Canadian steel and the ongoing economic uncertainty, the Bank of Canada announced a second straight rate hold today. Today's decision from Canada's central bank keeps their policy rate to 2.75%.
Tiff Macklem, the Governor of the Bank of Canada discussed the bank's decision to hold rates in his opening remarks. "Uncertainty remains high. The Canadian economy is softer but not sharply weaker. And we’ve seen some firmness in recent inflation data. Against this backdrop, we decided to hold the policy rate unchanged as we continue to gain more information on US trade policy and its impacts. The trade conflict initiated by the United States remains the biggest headwind facing the Canadian economy." (Bank of Canada, 2025)
Macklem explained the effects of the trade war and tariffs and how they are handling them. "In addition to the uncertainty about US tariffs, there is also uncertainty about their impacts. At its April decision, Governing Council said it would pay close attention to the extent to which higher tariffs reduce demand for Canadian exports; how much this spills over into business investment, employment and household spending; how much and how quickly cost increases are passed on to consumer prices; and how inflation expectations evolve." (Bank of Canada, 2025)
The Bank of Canada's next rate announcement is scheduled for Wednesday, July 30, 2025.
Graph Courtesy: Bank of Canada; https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/
Quotes Courtesy: Bank of Canada; www.bankofcanada.ca/2025/06/opening-statement-2025-06-04/
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