Bank of Canada holds key rate at 2.25 per cent once again
Monetary policymakers at the Bank of Canada use the policy rate to keep a lid on inflation and support economic growth when prices are contained.
On Wednesday, the Bank of Canada maintained its benchmark interest rate at 2.25 percent for a seventh consecutive time. This decision came amidst rising tensions in the Middle East, which have fueled inflationary risks and uncertainty surrounding Canada's economic recovery, as well as ongoing trade disputes with the United States.
Bank of Canada Governor Tiff Macklem stated that while the central bank cannot mitigate the impacts of tariffs or global energy prices, it can ensure such events do not undermine Canada's price stability. Inflation reached three percent in July due to the Iran war's volatility in gas prices. However, economic growth has shown signs of rebounding, with a 3.3 percent annualized growth in the second quarter.
The Bank of Canada anticipates no significant direct economic impact from the recent U.S. tariffs, although certain sectors may face challenges. The United States has retaliated by planning tariffs on Canadian goods starting September 8. Macklem noted that exports were increasing and businesses were adapting to trade restrictions, reaffirming a broadening economic recovery.
The governing council decided to keep the policy rate unchanged, but will reassess monetary policy as needed based on the economy's and inflation's performance.
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