Bank of Canada Maintains Interest Rate Amid Trade Uncertainty

The Bank of Canada has decided to maintain its policy interest rate at 2.25 per cent, citing uncertainty about the Canadian economy. This decision comes after a strong second-quarter GDP growth of 3.3 per cent annualized.

The recent breakdown in trade negotiations with the US and continued inflation spikes due to high energy prices are weighing on economic outlooks. The Bank notes that new US tariffs and Canadian counter-measures have been announced, keeping energy prices high.

Despite positive GDP growth, the Bank is cautious about the sustainability of the recovery, citing increased upside risks to inflation and uncertainty around growth prospects.