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Bank of Canada holds policy rate at 2.25% amid tariff and oil risks

The decision kept the Bank Rate at 2.5% and deposit rate at 2.20%, citing high oil prices, tighter financial conditions, and renewed tariff uncertainty.

Reported · Written up by our desk · Central Banks

The Bank of Canada held its target for the overnight rate at 2.25%, keeping the Bank Rate at 2.5% and the deposit rate at 2.20%, according to Action Forex.

In its policy assessment, the bank pointed to continuing conflict in the Middle East as a driver of high energy prices, with inflation still elevated in most countries. It also cited new US tariffs and Canadian countermeasures after the breakdown of trade talks, noting that both situations remained fluid.

The bank said Canada’s economic activity strengthened in the second quarter, with GDP up 3.3% after weak growth in the first quarter. Consumption posted gains, housing activity rebounded after several weak quarters, exports and business investment rose, and the unemployment rate edged down to 6.4% in July.

Still, the Bank of Canada warned that uncertainty is high and risks to the recovery’s sustainability include potential impacts from tariffs and threats of further action. It also said long-term bond yields have moved up globally and the Canadian dollar has appreciated slightly on US-dollar weakness, while demand for labor remains subdued and core inflation has stayed near 2% despite persistently higher gasoline prices.

Latest closeGasoline (RBOB) $3.096 ▼1.2%

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