Bank of Canada Maintains Overnight Rate Amid Global Uncertainty

The Bank of Canada has maintained its target for the overnight rate at 2.25%, with the Bank rate at 2.50% and the deposit rate at 2.20%. The ongoing conflict in the Middle East continues to drive up energy prices, and new US tariffs have been announced following a breakdown in trade talks between Canada and the United States.

The global economy has remained resilient despite geopolitical pressures, with growth broadly in line with the July Monetary Policy Report projection. In the US, economic growth remains strong, supported by consumer spending and AI-related investment, while China's economy slowed. Inflation remains elevated in many countries due to high oil prices.

CPI inflation has hovered around 3% in recent months due to high gasoline prices, but excluding gasoline, inflation was 2.2% in July. However, with the ongoing conflict in the Middle East and little progress in reopening the Strait of Hormuz, upside risks to the Bank's inflation outlook have increased.

Governing Council will assess the sustainability of the economic rebound and the outlook for inflation to keep it close to the 2.0% target and is prepared to adjust monetary policy as needed. The Bank remains committed to maintaining Canadians' confidence in price stability through this period of global upheaval.