Bank of Canada signals possible cuts ahead, but holds key policy rate steady for now at 2.75%

On July 30, 2025, the Bank of Canada held its benchmark interest rate at 2.75%, citing persistent U.S. trade tensions and inflation concerns. While the decision was expected, Governor Tiff Macklem emphasized that future rate cuts remain possible if economic weakness reduces inflationary pressures. Due to the unpredictability of U.S. tariffs, the Bank again refrained from issuing a single economic forecast in its Monetary Policy Report, instead offering three scenarios based on trade developments. Macklem warned that tariffs have pushed the Canadian economy onto a “permanently lower path” of growth, and while core inflation remains elevated, the Bank expects it to ease over time.

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