Bank of Canada Holds Interest Rate Steady at 2.75%

In a move that reflects cautious optimism, the Bank of Canada announced on Wednesday its decision to keep the interest rate unchanged at 2.75%. This decision comes at a time when the Canadian economy faces significant challenges from US tariff policies.

Economic Resilience Amid Challenges

The bank highlighted the economy's resilience, despite the disruptive impact of US tariffs on trade. "After experiencing robust growth in the first quarter of 2025, largely due to a surge in exports to circumvent impending tariffs, the GDP saw a decline of approximately 1.5% in the second quarter," the report detailed. This downturn was attributed to a sharp decrease in exports following the initial surge and reduced demand from the US due to tariffs.

Proceeding with Caution

The Governing Council emphasized a careful approach, closely monitoring the uncertainties and risks posed by US tariff policies. The bank is particularly attentive to how these policies affect various sectors, including household spending, corporate investments, employment rates, inflation, and consumer pricing.