Bank of Canada holds key rate at 2.75%


Governor Tiff Macklem says rate cut remains on the table if growth falters.

Signs of resilience in the Canadian economy were enough for the Bank of Canada to leave its benchmark interest rate unchanged Wednesday, but the spectre of U.S. trade uncertainty continues to cast a shadow over the central bank’s decisions.

The central bank’s policy rate remains at 2.75% after a third consecutive hold.

With a backdrop of considerable trade uncertainty, Canada’s economy has yet to deteriorate sharply in the face of U.S. tariffs and underlying inflation is showing some stubbornness.

Bankof Canada governor Tiff Macklem said the economy is showing “some resilience” so far.

But he said that if the economy weakens more and price pressures from tariffs are contained, “there may be a need for a reduction in the policy interest rate.”

The Bank of Canada lowers its policy rate when it wants to stimulate the economy but keeps borrowing costs elevated when it’s worried inflation will rise.