The Bank of Canada held its target for the overnight rate at 2.25% as the economy and inflation evolved broadly in line with the July Monetary Policy Report, while noting increased upside risks to inflation and greater uncertainty around growth from new tariffs. The central bank cut the rate by 25 basis points to 2.5% in September 2025 and by another 25 basis points to 2.25% in October, then held it unchanged. The Bank Rate remained at 2.5% and the deposit rate at 2.20%. Canadian gross domestic product rose 3.3% in the second quarter in a broad-based but partly temporary rebound, while the unemployment rate edged down to 6.4% in July, although indicators continued to show excess supply. Consumer price index inflation hovered around 3% amid persistently high gasoline prices, but inflation excluding gasoline was 2.2% and core measures remained close to 2% in July. The Canadian dollar appreciated slightly as the US dollar weakened. High energy prices linked to the continuing Middle East conflict, alongside new US tariffs and Canadian countermeasures, are sustaining global inflation pressures and clouding the outlook. Governing Council will assess the durability of Canada’s recovery and the inflation outlook and remains prepared to adjust monetary policy as needed.
2026-09-02Bank of Canada
Bank of Canada Holds Policy Rate at 2.25%
The Bank of Canada held its overnight rate target at 2.25%, with the Bank Rate at 2.5% and deposit rate at 2.20%, as economic activity and inflation broadly matched its July outlook. It noted increased upside inflation risks and greater growth uncertainty from energy prices, new U.S. tariffs and Canadian countermeasures.