OTTAWA, Dec. 10 (Xinhua) -- The Bank of Canada on Wednesday announced it is holding its key policy rate at the current level of 2.25 percent.
Bank of Canada Governor Tiff Macklem told a press conference that steep U.S. tariffs on steel, aluminum, autos and lumber have hit those sectors hard, and uncertainty about U.S. trade policy is weighing on business investment more broadly.
"But so far, the economy is proving resilient overall," Macklem said.
The central bank said that Canada's economy grew by a "surprisingly strong" 2.6 percent in the third quarter, noting that major economies around the world continue to show resilience to U.S. trade protectionism, but uncertainty is still high.
Final domestic demand is expected to grow in the fourth quarter, but with an anticipated decline in net exports, GDP will likely be weak, said the bank. "Growth is forecast to pick up in 2026, although uncertainty remains high and large swings in trade may continue to cause quarterly volatility," it said.
The bank assessed that underlying inflation is still around 2.5 percent, with the ongoing economic slack expected to roughly offset cost pressures associated with the reconfiguration of trade, which would keep CPI inflation close to the 2-percent target.
The Bank of Canada cut its key interest rate by 25 basis points four times this year, in January, March, September and October, while holding the rate steady in its decisions in April, June and July.
