Canada Holds Interest Rates Amid Escalating Trade War

The Bank of Canada is expected to hold its key interest rate at 2.25 percent on Wednesday, marking a seventh consecutive pause in rate decisions.

This decision comes as new U.S. tariffs and Ottawa's planned counter-measures cloud the economic outlook, with most economists backing a wait-and-see approach.

However, critics warn that standing pat while a re-escalating trade war pushes inflation to 3 percent risks leaving the central bank behind the curve.

The bank's caution reflects its reluctance to move on rates it might later have to retrace, given how quickly conditions can shift in an uncertain environment, according to Tony Stillo, director of Canada economics at Oxford Economics.