(MENAFN) The Bank of Canada held its benchmark interest rate steady at 2.25 percent on Wednesday, resisting pressure to cut further as trade disruptions clash with surprisingly robust economic performance.
Governor Tiff Macklem acknowledged at a press conference that punishing U.S. tariffs targeting steel, aluminum, automobiles, and lumber have severely damaged those industries. Business investment across broader sectors remains constrained by persistent uncertainty surrounding American trade policy.
“But so far, the economy is proving resilient overall,” Macklem said.
The central bank characterized Canada’s third-quarter economic expansion as “surprisingly strong” at 2.6 percent. Global economies continue demonstrating resistance to U.S. protectionist measures, though uncertainty persists at elevated levels, according to the bank’s assessment.
Economists expect domestic demand to strengthen through the fourth quarter. However, anticipated losses in net exports will likely produce anemic GDP figures, the institution warned. “Growth is forecast to pick up in 2026, although uncertainty remains high and large swings in trade may continue to cause quarterly volatility,” it said.
Core inflation hovers near 2.5 percent, the bank estimated. Economic slack should largely counterbalance cost increases stemming from trade realignment, keeping consumer price inflation anchored near the 2-percent target.
The Bank of Canada reduced rates by 25 basis points on four occasions this year—January, March, September, and October—while maintaining rates unchanged during April, June, and July deliberations.
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