Bank of Canada Holds Key Rate Steady Amid Trade War Uncertainty

The Bank of Canada held its benchmark interest rate steady at 2.25% on Wednesday amid concerns about new U.S. tariffs and the ongoing war in Iran.

Bank of Canada governor Tiff Macklem said that while the economy was evolving broadly in line with forecasts, the persistence of global conflicts increased inflationary risks due to rising energy prices.

Macklem noted that monetary policy cannot offset the effects of tariffs or influence global energy prices but emphasized that the central bank will ensure global developments do not compromise price stability in Canada.

The Bank of Canada has kept its key rate unchanged for seven straight meetings, and economists widely expected this decision. Some experts believe that Macklem's focus on rising inflationary risks gives the central bank a bias toward rate hikes rather than cuts.