Bank of Canada Holds Rates Steady Amid Trade Tensions and Inflation Risks

The Bank of Canada's governing council decided to hold the overnight rate at 2.25% for the seventh consecutive time, citing concerns about trade tensions and inflation risks.

In a recent report, officials acknowledged that the economy had rebounded in the second quarter with an annualized growth rate of 3.3%, but expressed concern that this momentum could be unsustainable due to heightened uncertainty surrounding global trade negotiations.

The council noted that renewed hostilities in the Middle East had pushed Canada's inflation rate above 2% for longer than anticipated, increasing the risk of high gasoline prices being passed through to other goods and services and becoming generalized inflation.