Bank of Canada Holds Rate Steady Amid US Trade War Uncertainty

Canada's central bank has decided to keep its benchmark interest rate unchanged at 2.25 per cent for the seventh consecutive time, citing uncertainty and risks from the ongoing trade war with the United States.

The Bank of Canada warned that new tariffs imposed by US President Donald Trump have made the growth outlook more uncertain, while increasing the risk of accelerating inflation.

These tariffs, which went into effect on August 21 after Prime Minister Mark Carney broke off trade talks, will raise costs for some businesses and potentially lead to higher consumer prices over time, according to the central bank statement.

Bank of Canada Governor Tiff Macklem noted that inflation has accelerated in July to three per cent, driven by rising fuel costs, but emphasized that businesses have been adapting to the new trade relationship by diversifying their exports.