The Bank of Canada announced it was maintaining the target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.
“While some elements of US trade policy have started to become more concrete in recent weeks, trade negotiations are fluid, threats of new sectoral tariffs continue, and US trade actions remain unpredictable,” said the central bank in a statement. “Against this backdrop, the July Monetary Policy Report does not present conventional base case projections for GDP growth and inflation in Canada and globally. Instead, it presents a current tariff scenario based on tariffs in place or agreed as of July 27, and two alternative scenarios—one with an escalation and another with a de-escalation of tariffs.”
The Bank of Canada added that CPI inflation was 1.9% in June, up slightly from the previous month, while inflation rose to 2.5% in June, up from around 2% in the second half of last year.
“With still high uncertainty, the Canadian economy showing some resilience, and ongoing pressures on underlying inflation, Governing Council decided to hold the policy interest rate unchanged,” the central bank’s statement continued. “We will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs related to tariffs and the reconfiguration of trade. If a weakening economy puts further downward pressure on inflation and the upward price pressures from the trade disruptions are contained, there may be a need for a reduction in the policy interest rate.”
