Governor Tiff Macklem announced that the Bank of Canada would hold its policy rate at 2.75%, citing three key reasons: ongoing U.S. trade uncertainty, early signs of resilience in the Canadian economy, and persistent underlying inflation pressures. Due to the unpredictability of U.S. tariff actions, the July Monetary Policy Report (MPR) does not include a traditional forecast. Instead, the Bank presented three scenarios—a current tariff baseline, an escalation, and a de-escalation—to capture the range of potential outcomes.
CPI inflation stands just below 2%, mainly due to the elimination of the carbon tax, but core inflation has risen to around 2.5%, driven by non-energy goods. Shelter inflation remains elevated, though it is easing. Business inflation expectations have softened, but consumer expectations remain elevated. In the Bank’s central scenario, inflation is expected to remain near 2%, with balanced risks. However, higher tariffs or trade-related costs could push prices higher, while economic slack may exert downward pressure.
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Acknowledgement of downside risks: The statement emphasized weaker growth in Q2 (–1.5% est.) and growing economic slack.
Inflation near target: Headline CPI at 1.9% and core around 2.5% gives the Bank room to ease if necessary.
Why It's Not Fully Dovish (Still Cautious):
Inflation vigilance: The Bank is still watching closely for upward pressures due to supply chain shifts and cost passthrough.
Three-scenario framework: By presenting base, escalation, and de-escalation scenarios, the BoC signaled it’s data-dependent and non-committal.
This article was written by Greg Michalowski at investinglive.com.Hence then, the article about bank of canada holds rates amid trade uncertainty and softening growth was published today ( ) and is available on forex live ( Middle East ) The editorial team at PressBee has edited and verified it, and it may have been modified, fully republished, or quoted. You can read and follow the updates of this news or article from its original source.
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