BoC Holds Steady as Oil Prices and Trade Uncertainty Weigh on Outlook

The Bank of Canada (BoC) left its overnight interest rate unchanged at 2.25%, as widely anticipated, but delivered a more cautious message due to increased inflation risks and a harder-to-assess economic recovery.

BoC Governor Tiff Macklem stated that multiple rate increases could be required if inflation remains a problem, while emphasizing that decisions will be guided by the inflation outlook and surrounding risks.

The bank's statement highlighted a difficult combination of subdued labour demand, continued excess supply, and rising uncertainty about the sustainability of the economic rebound.

New US tariffs and the threat of further trade action are clouding growth prospects, while the ongoing Middle East conflict is keeping energy prices higher for longer.