Bank of Canada holds key rate at 2.75% as tariff uncertainty persists

By Canadian Press on June 4, 2025.

OTTAWA — The Bank of Canada held its benchmark interest rate steady at 2.75 per cent today as policymakers wait for more clarity on how tariffs will impact the economy.

The central bank says there was consensus among its governing council for a second consecutive rate pause after inflation data showed “unexpected firmness” in April and the economy topped expectations in the first quarter of the year.

But the Bank of Canada is expecting more weakness in the coming months as businesses and consumers rein in spending and the tariff impact starts to show up in economic data.

Governor Tiff Macklem says “uncertainty remains high” around the trade conflict with the United States, with some import duties removed since the central bank’s last rate decision while other tariffs are still threatened.

Today marks the start of new 50 per cent tariffs from the United States on steel and aluminum imports — double the previous rate.

The Bank of Canada says it will still be less forward-looking through the tariff uncertainty, but Macklem says there might be room for more interest rate cuts if the economy starts to weaken and price pressures remain under control.

This report by The Canadian Press was first published June 4, 2025.

The Canadian Press