Bank of Canada Weighs Rate Hike Amid Tariff War and Middle East Conflict

Economists have long predicted that the Bank of Canada would hold its overnight rate at 2.25% throughout 2026, and so far, the bank has proven them correct.

However, caution lights are flashing in the hallways of the bank, as there's a possibility of a rate hike at its next announcement on October 28.

The Bank's governing council released minutes from their last meeting, which revealed that they're closely monitoring the US-Canada tariff war and its impact on the economy.

While they believe the war will have a limited effect, they're concerned about the chill falling over consumer and business confidence, which could lead to reduced hiring, investment, and household spending.

The council also warned that if trade tensions escalate, it could trigger a broader pass-through of energy costs into other components of inflation.