Bank of Canada Keeps Rate Steady Amid Inflation Concerns

The Bank of Canada has maintained its key interest rate at 2.25 per cent for the time being, as policymakers assess the impact of recent economic developments.

Bank of Canada Governor Tiff Macklem emphasized that monetary policy can't offset external factors like tariffs or global energy prices, but rather aims to maintain price stability in Canada.

The decision comes amid rising inflation, which reached three per cent in July due to volatility in gas prices following the Iran war. However, economic growth has shown signs of rebounding, with a 3.3 per cent annualized increase in the second quarter.

Macklem noted that while the US-imposed 50 per cent tariffs on Canadian goods may have some impact, the Bank of Canada doesn't expect a 'large direct effect' on the economy. However, targeted sectors could be affected significantly.