Bank of Canada Stands Pat Despite Looming Tariffs

The Bank of Canada has announced that it will not adjust its key interest rate in response to the ongoing trade war between Canada and the US. The rate remains at 2.25 per cent, despite the impending tariffs on Canadian goods set to take effect next week.

According to Governor Tiff Macklem, the impact of the tariffs on consumer prices may not be felt immediately. This is because most of the goods directly targeted in the escalating trade war are not included in the Consumer Price Index (CPI).

The CPI tracks the cost of items such as food, shelter, clothing, transportation, and recreation for Canadian consumers. While Macklem acknowledged that some of these tariffs may eventually lead to increased costs for consumers, he stated that their impact will be 'fairly modest'. The Bank of Canada will refine its estimates when it updates its forecast in the future.