The Bank of Canada held its key interest rate steady at 2.25 per cent on Wednesday, underscoring the resilience of the country’s economy despite tariffs imposed by US President Donald Trump.
Canadian economic activity rebounded in the third quarter, growing 2.6 per cent, while employment rose in November for the third consecutive month.
The central bank said it expects “weak” GDP growth in the fourth quarter due to an anticipated decline in net exports.
“Growth is forecast to pick up in 2026, although uncertainty remains high and large swings in trade may continue to cause quarterly volatility,” the bank said in a statement.
Canada has faced tariffs of 25 to 50 per cent on key exports to the United States, including steel, automobiles, and lumber. Trade negotiations were abruptly halted by Trump in late October and have yet to resume.
Amid the “elevated” uncertainty, the Bank of Canada said it is “prepared to respond” if economic conditions change.
“There is… uncertainty about how the Canadian economy will adjust to higher tariffs,” Governor Tiff Macklem told reporters. “While Canada’s economic sectors are proving resilient, trade and GDP volatility make it harder to gauge the underlying momentum of the economy.”
Macklem also warned of “some choppiness in headline inflation” in the coming months, with figures expected to rise temporarily. In October, consumer prices slowed to 2.2 per cent, close to the bank’s 2 per cent target.
The Bank of Canada will announce its next key rate decision on January 28.
AFP
