Bank of Canada Governor Tiff Macklem. Image: YouTube video capture
The Bank of Canada is keeping its benchmark interest rate at 2.75 percent as it monitors the impact of shifting U.S. trade policy and mixed signals in the Canadian economy.
The Bank Rate remains at 3 per cent and the deposit rate at 2.70 percent.
In its decision, the Bank cited ongoing global uncertainty, particularly related to U.S. tariffs, as a major factor.
While trade talks are underway between several countries, including China and the U.S., tariff levels remain well above where they were at the start of 2025—and new measures are still being threatened.
In Canada, the economy grew by 2.2 percent in the first quarter, slightly above the Bank’s forecast, helped by early exports to the U.S. ahead of tariff increases and rising inventory levels. However, consumer spending slowed, housing activity contracted, and unemployment rose to 6.9 per cent—especially in sectors most exposed to trade.
Inflation also remains a concern. Headline CPI fell to 1.7 percent in April following the elimination of the federal carbon tax, but core inflation, excluding taxes, rose to 2.3 per cent—slightly above expectations.
The Bank says it’s walking a fine line, balancing the risk of weaker domestic demand against the upward pressure on prices caused by higher import costs.
With no clear resolution in U.S. trade policy, the Governing Council says it will hold the rate steady while continuing to assess evolving risks.
The next interest rate decision and Monetary Policy Report will be released on July 30.
