July 30, 2025
RED FM News Desk
The Bank of Canada held its benchmark interest rate at 2.75 per cent on Wednesday, citing signs of resilience in the Canadian economy despite ongoing concerns over U.S. trade tensions.
It marks the third consecutive time the central bank has opted to keep rates unchanged. Governor Tiff Macklem said the decision reflected a “clear consensus” within the governing council, acknowledging that while growth has not sharply deteriorated, inflation remains somewhat persistent.
“We’re seeing some resilience in the economy,” Macklem said in prepared remarks. “But if trade-related disruptions are contained and economic momentum slows enough to ease inflationary pressure, a rate cut may be warranted.”
The Bank of Canada typically lowers interest rates to stimulate economic growth, and raises or holds them steady to keep inflation in check. For now, borrowing costs remain elevated as policymakers weigh the risks.
Despite a recent uptick in headline inflation to 1.9 per cent in June, the bank’s preferred measure—excluding volatile components and tax impacts—pegs core inflation closer to 2.5 per cent.
CIBC senior economist Andrew Grantham noted in a client update that the central bank appears increasingly open to the idea of cutting rates, with Macklem’s comments hinting at a potential move as early as September. However, Grantham cautioned that future economic data will be critical in shaping that decision.
While Canada’s labour market is feeling pressure in sectors affected by U.S. tariffs, particularly manufacturing, overall employment continues to trend positively in other industries.
The Bank of Canada says it will continue monitoring how tariffs are influencing business investment, export demand, and whether increased import costs are being passed on to Canadian consumers.
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