Canada Holds Policy Rate Amid Oil Price Uncertainty

The Bank of Canada decided to hold its policy rate at 2.25% on Wednesday, despite a strengthening domestic economy and rising inflation risks from elevated oil prices and growing uncertainty over trade with the United States.

The central bank's decision was in line with its July outlook, which warned that risks to inflation had increased due to higher gasoline prices, while new U.S. tariffs made the growth outlook more uncertain.

Canada's economy rebounded strongly in the second quarter after a weak start to the year, driven by a broad recovery across consumption, housing, exports, and business investment. However, labor demand remains subdued, and the economy continues to show excess capacity.