Bank of Canada holds interest rate amid tariff unpredictability [Video]

The Bank of Canada will hold the key interest rate amid tariff turmoil.

On Wednesday morning, the bank announced it will hold its target for the overnight rate at 2.75 per cent.

The major shift in direction of U.S. trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations, the Bank of Canada said in its announcement.

This uncertainty makes it “unusually challenging” to project growth and inflation in Canada and globally, the bank said.

Global economic growth was solid in late 2024 and inflation has been easing towards central bank targets, the announcement continued.

“However, tariffs and uncertainty have weakened the outlook,” the bank said in the announcement. “In the United States, the economy is showing signs of slowing amid rising policy uncertainty and rapidly deteriorating sentiment, while inflation expectations have risen.”

The tariff announcements have led to extreme market …