Bank of Canada Holds Rate Steady Amid Global Turmoil
The Bank of Canada maintained its overnight rate at 2.25% on Wednesday due to concerns about energy prices and US tariffs. The bank cited the ongoing conflict in the Middle East as a major factor, which has kept energy costs high.
Canada's economy showed signs of strengthening in the second quarter, with GDP increasing by 3.3%. However, the bank noted that some of this growth was due to temporary factors and not sustainable. Exports and business investment saw significant increases, while housing markets also showed improvement.
The unemployment rate edged down to 6.4% in July, but labour demand remains subdued with a continued excess supply in the economy. The bank emphasized that uncertainty is high and new US tariffs pose risks to the recovery's sustainability.