The Bank of Canada held its overnight rate at 2.75% at its July 2025 fixed announcement date meeting, its third consecutive hold after a sequence of reductions that brought the policy rate down from its peak. The decision, announced through the press release on the Bank's website, reflected still-high uncertainty, signs of resilience in the Canadian economy and ongoing pressures on underlying inflation, with the Governing Council saying it was proceeding carefully.
ECONOMIC ASSESSMENT
The Bank estimated that GDP likely fell by about 1.5% in the second quarter as exports reversed after tariff front-running, while the unemployment rate had risen to 6.9% in June and underlying inflation was assessed at around 2.5%. The July statement did not signal an imminent cut, but said there may be a need for a reduction if a weakening economy puts further downward pressure on inflation and upward price pressures from trade disruptions are contained.
CPI inflation was 1.9% in June, but the Bank assessed underlying inflation at around 2.5% and cited ongoing pressures on underlying inflation as one reason to hold.
TARIFF UNCERTAINTY
The Bank identified elevated uncertainty about the tariff impact as a key factor in its deliberations.