FX.co ★ Bank of Canada Holds Rate at 2.75% for 2nd Meeting

The Bank of Canada announced in its June 2025 decision that the benchmark interest rate would remain steady at 2.75%. This move was anticipated by half of the market and comes as the second pause after a series of seven reductions totaling 2.25 percentage points. The governing council emphasized the impact of varying U.S. tariffs, which are still significantly higher than at the start of 2025, as well as the unpredictable nature of bilateral trade negotiations. This situation poses risks to economic growth and raises inflation expectations, suggesting a need for careful consideration before continuing monetary easing. The ongoing uncertainty is primarily due to the lack of a definitive tariff strategy from the U.S. and the constant threat of new trade measures. The Bank of Canada’s Governing Council has pointed out concerns, specifically regarding how increased U.S. tariffs might lower the demand for Canadian exports.