Bank of Canada Holds Fire on Interest Rates Amid Escalating Trade Tensions

The Bank of Canada has kept its key policy rate at 2.25% for the eleventh consecutive month, despite escalating trade tensions between Canada and the US.

The decision was widely anticipated by markets, but it does not mean that the bank is ignoring the growing risks to economic growth posed by tariffs imposed by both countries.

US President Donald Trump's latest 50% tariffs on certain Canadian imports have come into effect, and economists warn that these measures could dampen business and consumer sentiment. Canada has retaliated with its own tariffs, which could contribute to inflationary pressures.