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Tiff Macklem holds Bank of Canada interest rates steady at 2.25% amid trade war and inflation risks

The Bank of Canada held its key interest rate at 2.25% for the seventh consecutive decision during its September meeting. Governor Tiff Macklem stated that the central bank is monitoring elevated energy prices from the Middle East conflict and the re-escalating trade war with the United States. While the economy grew by 0.8% in the second quarter, the administration's new tariffs on Canadian goods and Canada's retaliatory tariffs, set to take effect on Sept. 8, have introduced growth uncertainty. Macklem noted that while the administration's duties weigh on growth, the bank is prioritizing price stability. Headline consumer inflation reached 3% in July, which Macklem described as higher than the bank's 2% target. Macklem emphasized that the bank cannot influence global energy prices or the direct effects of tariffs, but can ensure global developments do not jeopardize price stability. He noted that businesses are adapting to the current environment of uncertainty. The bank will update its inflation forecast at the next rate announcement on Oct. 28.

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