Bank of Canada Governor Tiff Macklem said in June that “there could be a need” for more rate cuts if U.S. tariffs continue. Analysts and investors will be watching for further hints about where rates might go.Adrian Wyld/The Canadian Press
07/30/25 07:00Bank of Canada expected to hold key rate at 2.75 per cent
– Mark Rendell
The Bank of Canada is seen in Ottawa, on Wednesday, April 16, 2025.Justin Tang/The Canadian Press
The Bank of Canada is expected to remain on the sidelines for the third consecutive time as U.S. President Donald Trump’s trade war continues to sow uncertainty for the Canadian economy.
The central bank has kept its benchmark policy rate at 2.75 per cent since April, waiting to see how much Mr. Trump’s tariffs stifle economic activity, as well as how much supply chain disruptions and Ottawa’s retaliation push up consumer prices.
With annual core inflation measures at 3 per cent and no clarity on a potential trade deal with the U.S. ahead of the Aug 1 deadline, there’s little chance the bank will cut today, according to Bay Street analysts and financial market pricing.
The key questions surrounding the rate decision are how Governor Tiff Macklem and his team will talk about the impact of tariffs and the risk of inflation, and whether they will publish a central forecast after foregoing one in April.
The rate decision will be announced at 9:45 a.m. ET alongside the publication of the bank’s quarterly Monetary Policy Report. Mr. Macklem and senior deputy governor Carolyn Rogers will hold a press conference at 10:30 a.m. ET.
After cutting interest rates eight consecutive times in 2024 and early 2025, the BoC has been taking a wait-and-see approach to monetary policy. Trade wars tend to push up consumer prices. But they can also hurt economic activity and increase unemployment, which puts downward pressure on inflation over time. That puts central bankers in a bind.
All eyes will be on how Mr. Macklem weighs these two risks in his press conference remarks. Analysts will also be parsing the MPR to see if the central bank has published a forecast, or opted once again to publish upside and downside risk scenarios based on different possible trade war outcomes.