Bank of Canada Holds Interest Rate as Trade Tensions Loom Over Housing Market

The Bank of Canada decided to hold its overnight rate at 2.25%, following a familiar script in its September 2 rate decision.

Full-time employment increased by about 193,000 from April through July, while inflation, minus gasoline prices, has held steady at 2.2% for three months in a row.

A rate cut could prove inflationary, driving prices higher and putting more pressure on Canadian households that are already nearing a breaking point.

The housing market has struggled to outperform even 2025's sickly sales totals, with approachable variable mortgage rates hovering around 3.4% thanks to seven consecutive rate holds.

However, the Bank of Canada may have to consider cutting the overnight rate in October or December if trade tensions escalate further.