As the trade uncertainty with the United States carries on, the Bank of Canada announced this morning that they will hold their rate hold. Today's decision from Canada's central bank keeps their policy rate to 2.75% and is the third consecutive hold, following their decisions in April and June of this year.
Tiff Macklem, the Governor of the Bank of Canada said the Governing Council's decision reflects three main considerations. "First, uncertainty about US tariffs on Canada is still high. Discussions between Canada and the United States are ongoing, and US policy remains unpredictable. Second, while US tariffs are disrupting trade, Canada’s economy is showing some resilience so far. Third, inflation is close to our 2% target, but we see evidence of underlying inflation pressures." (Bank of Canada, 2025)
Macklem also discussed the need to proceed carefully. "At this rate decision, there was clear consensus to hold our policy rate unchanged. We also agreed that we need to proceed carefully, with particular attention to the risks and uncertainties facing the Canadian economy. These include: the extent to which higher US 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 from tariffs and trade disruptions 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, September 17, 2025.
Graph Courtesy: Bank of Canada; https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/
Quotes Courtesy: Bank of Canada; https://www.bankofcanada.ca/2025/07/opening-statement-2025-07-30/
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