Bank of Canada holds rate at 2.25% as inflation risks rise

The Bank of Canada kept its benchmark overnight rate at 2.25% on Wednesday but warned that inflation risks have increased as high energy prices persist and new trade measures raise business costs. The widely expected decision leaves the policy rate unchanged for an 11th month, Reuters reported.Bank of Canada — September 2 policy rate decision · Reuters — Bank of Canada holds rate as inflation risks rise

The central bank said conflict in the Middle East is keeping energy prices elevated, while new U.S. tariffs and Canadian countermeasures following the breakdown of bilateral trade talks could feed into consumer prices. Those pressures have made the growth outlook more uncertain even as the economy and inflation have evolved broadly in line with the Bank's July forecast.Bank of Canada — September 2 policy rate decision · Reuters — Bank of Canada holds rate as inflation risks rise

Canadian consumer-price inflation has hovered around 3% in recent months, mainly because of higher gasoline prices. The Bank said inflation excluding gasoline was 2.2% in July and its preferred core measures remained close to 2%, with little evidence so far that energy costs have spread broadly across other prices.Bank of Canada — September 2 policy rate decision

Policymakers nevertheless said the longer oil prices and refinery margins remain elevated, the greater the risk that costs spill into other goods and services. Tariffs and counter-tariffs create a similar risk by increasing expenses for some businesses, even as trade uncertainty threatens investment and growth.Bank of Canada — September 2 policy rate decision · Reuters — Bank of Canada holds rate as inflation risks rise

The Bank left the Bank Rate at 2.5% and the deposit rate at 2.20% and said it is prepared to adjust monetary policy as needed. Its next scheduled rate decision, accompanied by a new Monetary Policy Report, is October 28.Bank of Canada — September 2 policy rate decision