Canada Interest Rate

The Bank of Canada held its benchmark interest rate unchanged at 2.75% in its July 2025 decision, as expected by markets, to mark the third hold following 2.25 percentage points of cuts throughout seven consecutive decisions. The Governing Council stated that the unpredictability in the magnitude of tariffs disabled policymakers from offering any guidance on the economy and the BoC's reaction function, as sectoral and baseline tariffs from the US maintained volatility in global trade. The Council noted that the Canadian economy has so far shown resilience to tariffs already mandated with employment holding up and H2 growth projections remaining optimistic under the current tariff scenario. Still, the second-quarter GDP is due to contract as exporters received fewer orders after front-loading deliveries in Q1. On the price front, the BoC expects CPI inflation to remain near the 2% target in the medium term.