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[BUSINESS] · Canada, United States · 23 sources

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Bank of Canada holds interest rate at 2.25%

The Bank of Canada has maintained its overnight interest rate at 2.25% for the seventh consecutive meeting. The decision comes as the central bank monitors shifting economic risks, including rising inflation concerns and geopolitical instability.

Governor Tiff Macklem noted that while the Canadian economy showed a broadening recovery in the second quarter—with GDP growing by 3.3%—uncertainty remains high. Key headwinds include the ongoing conflict in the Middle East, which continues to drive up global energy prices, and a breakdown in trade negotiations with the United States. The introduction of new US tariffs and subsequent Canadian counter-measures pose risks to the sustainability of the economic rebound.

Inflation has recently hovered around 3%, largely driven by elevated gasoline prices. However, the bank noted that core inflation, excluding gasoline, remained near 2.2% in July. Policymakers emphasized that while they are monitoring the potential for energy price shocks to spill over into broader consumer prices, they are prepared to adjust monetary policy if inflation risks intensify.

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Bank of Canada · Canada · Middle East · Tiff Macklem · United States

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