Trade Tensions Cloud Bank of Canada's Interest Rate Decision

The Bank of Canada is set to announce its decision on interest rates on Wednesday. The majority of economists expect the bank to keep the overnight rate at 2.25 per cent for the rest of the year, but there is uncertainty surrounding future decisions.

Recent trade tensions with the US have clouded the economic outlook, and some experts believe that inflation could remain elevated if the situation doesn't improve. The federal government has imposed counter-tariffs in response to the US Section 338 tariffs, which were implemented on August 22 after trade talks broke down.

Jean-François Perrault, chief economist at Bank of Nova Scotia, stated that there is an argument for rate hikes before trade negotiations broke down because Canada's economic data looked strong. However, he added that the uncertainty from the breakdown in trade discussions outweighs any other economic data.