Bank of Canada left its policy rate at 2.25% for a seventh consecutive meeting, in line with market expectations. Policymakers flagged rising uncertainty from an escalating tariff dispute with the United States after bilateral talks collapsed in late August; the U.S. has imposed 50% tariffs on hundreds of Canadian products and Canada has retaliated with counter-tariffs. The central bank cited higher fuel costs related to the Middle East conflict as a driver of headline inflation rising to 3.0% Y

Bank of Canada left its policy rate at 2.25% for a seventh consecutive meeting, in line with market expectations. Policymakers flagged rising uncertainty from an escalating tariff dispute with the United States after bilateral talks collapsed in late August; the U.S. has imposed 50% tariffs on hundreds of Canadian products and Canada has retaliated with counter-tariffs. The central bank cited higher fuel costs related to the Middle East conflict as a driver of headline inflation rising to 3.0% YoY — the first increase to that level since 2023 — while core inflation remains close to the 2% target. Officials said trade-driven tariffs add upside price risk and are weighing on growth, supporting a decision to keep short-term borrowing costs stable. BOC analysis indicates Canada’s retaliatory duties would further raise inflation.