Bank of Canada holds interest rate at 2.75%
Posted on: Jun 04, 2025 19:21 IST | Posted by: Cbc
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This is the key line from this morning’s release (and could very well have come from the last Bank of Canada decision in April).
“With uncertainty about U.S. Tariffs still high, the Canadian economy softer but not sharply weaker and some unexpected firmness in recent inflation data, governing council decided to hold the policy rate as we gain more information on U.S. Trade policy and its impacts.”
This is what economists were expecting.
Economists largely expect the central bank to keep rates where they are (for now).
Scotiabank’s vice-president of capital markets economics, Derek Holt, has maintained for months now that the bank hasn’t shown a reason to cut.
“Cutting now when it’s nowhere close to being priced and after holding since March could motivate markets to think that the [Bank of Canada] is priming for another round of easing. You can’t just take one chip out of the bag. Markets would probably price another cut for the July meeting and maybe add more later.
“You’d better have a lot of confidence that a cut now is the right thing to do given the risk that it could spark outsized easing of financial conditions compared to the policy rate adjustment itself.”
Canada is navigating economic turbulence sparked by tariffs imposed by U.S. President Donald Trump.
Follow the country's progress at a glance here.
I'm Verity Stevenson and I'll be curating your live updates on this Bank of Canada rate decision day.
We'll be bringing you updates and analysis from our team of business reporters as well as from industry experts and different economic sectors that stand to be affected by this month's rate.
Stay tuned as the Bank of Canada interest rate is set to publish in 15 minutes.
Today, the Bank of Canada is set to announce its interest rate decision. After the most recent GDP reading showed stronger-than-expected economic growth, and core inflation showed signs of heating up, economists ditched bets that the central bank would cut the rate by 25 basis points. Many of them now expect the bank will hold at 2.75 per cent.
We’ll find out at 9:45 a.m. ET.
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