Bank of Canada Holds Key Rate as it Prioritizes Inflation Risks

The Bank of Canada left its key interest rate unchanged at 2.25% for a seventh consecutive decision, as Governor Tiff Macklem prioritized 'multiple risks in play'.

Macklem emphasized that inflationary risks have sharpened since the last decision in July, with global oil prices remaining persistently high and no end in sight to the Middle East conflict.

While the economy had been rebounding ahead of new US tariffs hitting Canadian goods as of August 22, Macklem warned that these duties would weigh on fourth-quarter growth and hit targeted sectors hard.

Despite this, he said the central bank did not foresee a 'large direct impact' on the wider economy. Macklem also noted that businesses have been adapting to an uncertain environment with higher tariffs and finding ways to do business, which has put the Canadian economy on better footing going into this latest new wave of US tariffs.