Bank of Canada Holds Rates Steady Amid Inflation Risks
The Bank of Canada announced that it would keep interest rates unchanged at 2.25%. The decision comes as energy prices remain high due to the ongoing conflict in the Middle East, and new US tariffs have been imposed on Canadian goods.
Governing Council noted that while economic growth is solid, with GDP up by 3.3% in the second quarter, there are still risks to the sustainability of the recovery. The Bank also highlighted that core inflation remains close to 2%, but the risk of inflation spreading beyond gasoline prices has increased.
The Bank's statement had a hawkish tilt, emphasizing the upside risks to inflation and the potential for higher business costs and consumer prices due to new tariffs. However, the decision to hold rates unchanged suggests that the Bank is not yet ready to hike interest rates.