Bank of Canada Stands Pat on Rates Amid Trade Tensions

The Bank of Canada has maintained its key policy rate at 2.25 per cent, as widely expected, despite growing concerns over inflation and trade tensions.

Canada's economy rebounded at an annualized rate of 3.3 per cent in the second quarter, but faces dual risks from the worsening trade dispute with the US.

US tariffs threaten to weaken growth, while Canada's dollar-for-dollar retaliation could put upward pressure on domestic prices.

Governor Tiff Macklem said that while the new tariffs will not have a 'large direct impact' on economic activity, uncertainty about future trade relations may lead businesses to delay investment and hiring decisions.