Canada central bank holds interest rate steady amid tariffs chaos [Video]

The Bank of Canada on Wednesday held its key lending rate at 2.75 percent, pausing a stream of recent cuts due to shifting US trade policy and tariffs.

“The major shift in direction of US trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations,” the central bank said in a statement.

The bank painted a dire economic picture, including the worst-case scenario of a protracted trade war with the United States — Canada’s biggest trading partner — triggering a recession and sending prices soaring.

It noted that after solid growth in late 2024 and inflation easing toward the bank’s 2.0 percent target, financial markets are in turmoil, oil prices have dropped, and the Canadian dollar has appreciated as a result of broad US dollar weakness.

Tariff announcements and uncertainty have pulled down consumer and business confidence, leading to lower consumption …