Canada Holds Rate as Tariff Uncertainty Weighs on Growth
The Bank of Canada kept its policy rate unchanged at 2.25% on Wednesday as a strengthening domestic economy was weighed against rising inflation risks from elevated oil prices and growing uncertainty over trade with the United States.
The central bank's decision to hold its overnight rate target, Bank Rate, and deposit rate was in line with its July outlook, but policymakers warned that risks to inflation had increased while new U.S. tariffs had made the growth outlook more uncertain.
Canada's economy rebounded strongly in the second quarter after a weak start to the year, with the recovery broadening across consumption, housing, exports and business investment. The unemployment rate edged lower in July, but labor demand remained subdued and the economy continued to show excess capacity.