Bank of Canada Holds Steady Amid Trade War Uncertainty

The Bank of Canada kept its key interest rate at 2.25% in a decision announced on Wednesday, despite rising uncertainty due to US tariffs and the threat of war with Iran.

According to Governor Tiff Macklem, the new duties imposed by the US on Canadian goods could weigh heavily on fourth-quarter growth, but he does not foresee a significant impact on the overall economy.

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

Frances Donald, chief economist at RBC, noted that Macklem's focus on inflation risks suggests he is more concerned about a resurgence of inflation than a decline in economic growth.