The Bank of Canada held the line on its key benchmark interest rate this week, something pretty much every economist in the land had been predicting. But where we go from here is not so clear.
In deciding to stand pat, it weighed a lot of factors. First, there is the tariff situation. But there’s also inflation. It won’t go away as global unrest puts upward pressure on oil prices which, in turn, drives up the price at the pumps affecting everyone from the average vehicle owner to the supply chain which relies on transport to get goods to the local store shelf. And higher inflation means pressure to raise interest rates.
The offset is tariffs. When things are slow economically, the central bank may lower rates to stimulate spending. Finding the middle ground between push and pull prompted the decision to sit still for now.
Some leading economists expect this pattern to hold until the end of next year. Others say expect a rate hike before the end of the year with more increases in 2027.
