Bank of Canada Holds Benchmark Rate at 2.75% as Tariff Risks Loom

Inflation’s choppy signal and Washington’s sudden tariff hike forced the Bank of Canada to stand pat on Wednesday, leaving its policy rate anchored at 2.75 per cent for the second straight meeting. Governor Tiff Macklem called the decision “a clear consensus,” pointing to 50 per cent U.S. duties on steel and aluminum that took effect the same morning and have thrown cross-border trade into doubt. With price pressures still flirting above 3 per cent, policymakers judged that moving now—up or down—would risk steering the economy blindly through a fog of uncertainty.

Even so, the central bank conceded rate cuts are on the table if tariffs start biting growth without stoking fresh inflation. Businesses front-loaded imports early this year to dodge higher costs, and officials expect that burst to be followed by a softer second quarter. Core inflation’s recent pop has their full attention, but Macklem hinted that weak demand could outweigh price worries by July, when the governing council next meets armed with two more months of jobs and CPI data.

Market odds already price a 44 per cent chance of a July trim, and Bay Street’s heavyweight economists are split down the middle. BMO’s Doug Porter calls the next move a “coin toss,” while CIBC’s Avery Shenfeld pegs two quarter-point cuts—July and September—if labour cracks widen and non-tariff prices cool. For now, Canadians must navigate higher borrowing costs a while longer, even as wildfires, trade battles, and political brinkmanship keep rewriting the economic playbook.