Bank of Canada holds key rate steady but warns future movements unclear
The Bank of Canada held its benchmark interest rate at 2.25% for a fourth consecutive time, citing uncertainty over the war in Iran and future US tariffs. Bank Governor Tiff Macklem warned that the policy rate could move higher or lower in the coming months depending on how economic risks play out.
The Bank of Canada maintained its benchmark interest rate at 2.25% on Wednesday. Governor Tiff Macklem stated that the rate is likely at the right level if the economy follows the central bank's projections, but future adjustments are possible. The bank identified uncertainty surrounding the war in Iran and the Canada-US-Mexico trade agreement review as key factors that could influence the policy rate. If the US imposes sharper trade restrictions on Canada, the bank may need to cut the rate to support the economy. Conversely, if the Iran war drives up global energy prices, the central bank may need to tighten monetary policy to control inflation. Statistics Canada reported an annual inflation rate of 2.4% in March, largely due to a surge in gas prices. The Bank of Canada expects inflation to peak around 3% in April before cooling back to its 2% target by early next year.
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