Bank of Canada Holds Interest Rates Steady Amid US Trade Uncertainty

The Bank of Canada held its interest rates steady at 2.25% for the overnight rate, 2.20% for the deposit rate, and 2.5% for the Bank Rate on September 2, 2026.

Bank of Canada Governor Tiff Macklem warned that ongoing uncertainty about US-Canada trade relations could lead businesses to delay investments and hiring decisions, affecting both sides of the border.

The main concern is tariffs, with the US imposing a 50% levy on Canadian goods in September 2026, prompting Canada to respond with dollar-for-dollar counter tariffs.

The Iran war has also contributed to the strain, driving up oil prices worldwide due to restricted commercial shipping traffic through the Strait of Hormuz.