Bank of Canada Holds Key Interest Rate Amid Ongoing Trade War Uncertainty

The Bank of Canada has held its key interest rate at 2.25% for the seventh consecutive time, unchanged since last October.

This decision comes as the bank weighs the risks of an escalating trade war with the United States.

Canada's economy has shown more resilience than expected, growing at an annualized rate of 3.3% in the second quarter this year, its fastest quarterly expansion in over three years.

However, uncertainty remains high due to ongoing trade tensions and new US tariffs, which pose risks to the sustainability of the recovery.

The bank warned that if a tit-for-tat tariff battle continues, interest rate cuts might be needed to support the economy through a downturn. Conversely, if hostilities cool down, an improving economic outlook may result in a rate hike in the coming months.