OTTAWA — The Bank of Canada held its benchmark interest rate at 2.75 per cent on Wednesday, pointing to economic uncertainty tied to U.S. trade tensions and persistent inflation pressures.
Governor Tiff Macklem said the central bank is monitoring the situation closely and could cut rates as early as July if conditions worsen, though he cautioned against interpreting that as forward guidance.
“On balance, there was agreement across the governing council that if tariffs continued, further weakness, inflation — there could be a need for further reduction in policy,” Macklem said.
The decision comes as the Canadian economy shows signs of resilience, including 2.2 per cent GDP growth in the first quarter. But Macklem said the outlook remains uncertain, particularly after the United States doubled tariffs on Canadian steel and aluminum to 50 per cent, raising concerns about the country’s economic stability.
Inflation, excluding taxes, reached 2.3 per cent in April, while core inflation rose to 3.15 per cent — the fastest pace in nearly a year. Despite these pressures, the Bank opted to stay the course to balance inflation control with overall economic support.
The Canadian dollar rose slightly after the announcement, hitting its highest level since October 2024.
The Bank’s next rate decision is scheduled for July.
