Bank of Canada Holds Key Rate as Tariffs and Iran War Cloud Outlook

The Bank of Canada held its benchmark interest rate steady at 2.25% on Wednesday, despite ongoing concerns about the impact of new US tariffs and the Iran war on the economy.

Bank of Canada governor Tiff Macklem said in prepared remarks that the persistence of the Middle East conflict has increased inflationary risks as global energy prices continue to rise.

Macklem emphasized that monetary policy cannot offset the effects of tariffs or influence global energy prices, but can help ensure that global developments do not jeopardize price stability in Canada.

The bank's decision was widely expected by economists, and some analysts argue that Macklem's focus on rising inflationary risks gives the Bank of Canada a bias towards rate hikes rather than cuts.