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

The central bank cited rising upside risks to inflation and said it is monitoring for any spillover from higher oil prices into broader consumer costs.

Reported · Written up by our desk · Central Banks

The Bank of Canada held its policy rate at 2.25%, and Governor Tiff Macklem said recent growth and inflation data have broadly matched what the bank projected in July, according to Action Forex.

Macklem pointed to a “broadening recovery” after second-quarter GDP rose 3.3%, with gains across consumption, housing, exports and business investment. The labor market has also improved, with unemployment edging down to 6.4% in July.

Even with that progress, the BoC said it still sees continued excess supply and warned that new U.S. tariffs and uncertainty around Canada U.S. trade could threaten the recovery’s sustainability. Inflation is around 3%, with gasoline excluding inflation at 2.2% in July, and core measures near 2%.

The bank said it is looking through the direct effect of higher oil prices, but is monitoring closely for spillovers to other prices and services. It added that longer periods of high oil prices and refinery margins, alongside unresolved Middle East conflict and curtailed Hormuz shipments, could increase the risk that energy costs become persistent inflation, leaving it in a wait-and-assess stance rather than signaling an imminent move.

Latest closeGasoline (RBOB) $3.096 ▼1.2%

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