Bank of Canada holds key interest rate at 2.75%, cites ‘unusual uncertainty’

The Bank of Canada held its key interest rate steady at 2.75 per cent for the second consecutive time, citing ongoing trade uncertainty and an economy that continues to chug along.
 
The decision on Wednesday was in line with financial market expectations, which favoured a hold after recent strong-than-expected economic data.
 
“With uncertainty about U.S. tariffs still high, the Canadian economy softer but not sharply weaker, and some unexpected firmness in recent inflation data, governing council decided to hold the policy rate as we gain more information on U.S. trade policy and its impacts,” the central bank said in a news release.
 
The Bank of Canada held its key interest rate in April as well, pointing to the same trade uncertainty that contributed to its decision on Wednesday. The central bank is suggesting that economic data since then hasn’t fuelled urgency for rate cuts.
 
The elimination of the consumer carbon price brought down Canada’s inflation rate in April was 1.7 per cent, however underlying price pressures were firmer, with the central bank’s preferred measures of core inflation up that month. Meanwhile, the economy grew at 2.2 per cent in the first quarter, slightly higher than the Bank of Canada forecast as exports increased ahead of tariffs.