In its latest policy decision on July 30, 2025, the Bank of Canada (BoC) opted to keep its key policy interest rate at 2.75%, marking the third consecutive meeting in which it has chosen to hold rates steady. This move reflects the Bank’s cautious stance amidst global economic uncertainty and ongoing inflationary pressures. Governor Tiff Macklem emphasized that while inflation has made significant progress and is nearing the 2% target, underlying pressures remain, necessitating a careful approach to monetary policy.
The decision comes as global trade tensions, particularly those tied to tariff disputes, have shown signs of easing. The Bank indicated that these reduced risks could contribute positively to the Canadian economy, providing a window of stability amidst broader global challenges. However, Macklem made it clear that while the economic outlook is more stable, the BoC remains vigilant in its efforts to curb inflation and ensure long-term economic growth.
The central bank, however, did not provide specific economic forecasts, opting instead to outline three hypothetical scenarios based on varying outcomes of global trade dynamics. This approach highlights the Bank’s recognition of the unpredictable nature of international trade and its potential impact on the Canadian economy. The BoC also signalled that it is prepared to adjust its policy rate if economic conditions demand it, reiterating its commitment to supporting growth while ensuring inflation does not spiral out of control.
Despite the steady interest rate, inflation remains a key concern. Although core inflation has come closer to the Bank’s target, its persistence is a reminder of the broader economic pressures at play. For the Canadian public and businesses, this cautious stance offers a sense of stability, but the BoC’s readiness to act if necessary underscores the uncertain road ahead.
As the global economy continues to evolve, the Bank of Canada will likely keep a close eye on international developments and be prepared to adjust its approach to maintain economic stability and growth.
