Finance & Currencies
Canada holds rate at 2.25% as US tariff risks grow
Canada's central bank held its benchmark interest rate at 2.25% on Wednesday for the seventh straight time, while warning that the trade war with the United States has made the growth outlook more uncertain and increased inflation risks.
The Bank of Canada said new tariffs imposed by US President Donald Trump and threats of further action pose risks to the sustainability of Canada's recovery.
The decision came after Canada's economy rebounded in the April-June quarter, with gross domestic product expanding 3.3% on an annual basis after two lackluster quarters.
Trump has imposed new tariffs on Canada of up to 50%, which took effect after Prime Minister Mark Carney broke off trade talks on August 21. Canada has retaliated with tariffs on American products that are set to take effect on September 8.
The Bank of Canada said both sets of measures will raise costs for some businesses and could lead to higher consumer prices over time.
Bank of Canada Governor Tiff Macklem said businesses have been adapting to the new trade relationship and diversifying exports. He also said inflation, which rose to 3% in July on higher fuel costs, “is running too high”.
TD Bank said in a note that it expects the rate to remain unchanged through next year, but that the central bank preserved flexibility if conditions worsen or inflation proves more persistent than expected.
Update
Bank of Canada Governor Tiff Macklem said businesses are adapting to the new trade relationship and diversifying exports.
Macklem said inflation is running too high after accelerating to 3% in July on rising fuel costs.
TD Bank said it expects the rate to remain unchanged through next year, while noting the central bank preserved flexibility.
Source note: AFP news report published on 2 September 2026 at 16:02:13 UTC.
Update
The Bank of Canada said uncertainty is high and new US tariffs and threats of further action pose risks to the sustainability of the recovery.
Canada's GDP expanded 3.3 percent on an annual basis in the April-June quarter after two lackluster quarters.
Prime Minister Mark Carney broke off trade talks with the United States on August 21, after which the United States imposed new tariffs and Canada retaliated.
The Bank of Canada warned that tariffs on both sides could raise costs for some businesses and lead to higher consumer prices over time.
Source note: AFP news report published on 2 September 2026 at 14:43:06 UTC.
Update
The Bank of Canada held the benchmark rate unchanged for the seventh successive time.
The decision came amid higher inflation risks and an escalating trade war with the United States.
Source note: AFP news report published on 2 September 2026 at 13:58:01 UTC.
Uncertainty notes
The eventual effect of the tariff measures on growth and consumer prices remains uncertain.
Source
AFP news report published on .