{"id":192613,"date":"2026-09-02T11:33:06","date_gmt":"2026-09-02T11:33:06","guid":{"rendered":"https:\/\/www.europesays.com\/canada\/192613\/"},"modified":"2026-09-02T11:33:06","modified_gmt":"2026-09-02T11:33:06","slug":"live-updates-bank-of-canada-expected-to-hold-key-interest-rate-as-trade-war-with-u-s-escalates","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/canada\/192613\/","title":{"rendered":"Live updates: Bank of Canada expected to hold key interest rate as trade war with U.S. escalates"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

A man checks his phone as he walks past the Bank of Canada building in Ottawa. The BoC cut interest rates four times in 2025 and held it through 2026.Adrian Wyld\/The Canadian Press<\/p>\n

09\/02\/26 07:00BoC expected stay on hold amid escalating trade war<\/p>\n

– Mark Rendell<\/p>\n

Open this photo in gallery:<\/a><\/p>\n

Finance Minister Fran\u00e7ois-Philippe Champagne speaks on Canada’s response to U.S. tariffs at a news conference on Aug. 25 in Ottawa.Justin Tang\/The Canadian Press<\/p>\n

While the U.S.-Canada trade war is moving fast, the Bank of Canada is expected to stand pat this morning, waiting for the dust to settle before making any sudden moves. <\/p>\n

The odds of a rate hike or cut were already low heading into the fall. The breakdown of trade negotiations between Ottawa and Washington \u2013 followed by tit-for-tat tariff threats \u2013 has only increased the likelihood that the central bank will keep its policy rate steady at 2.25 per cent for the seventh consecutive time. <\/p>\n

The fundamental challenge for Governor Tiff Macklem and his team is uncertainty. The trade war could quickly escalate if Canada imposes retaliatory tariffs on Sept. 8<\/a> and the U.S. hits back with yet another wave of tariffs. But it\u2019s also possible that the two sides could return to the negotiating table and hammer out an agreement in short order. <\/p>\n

In the first scenario, interest rate cuts might be needed to support the economy through a downturn. In the second scenario, an improving economic outlook coupled with the fact that headline inflation is already at the top of the central bank\u2019s control band might recommend a rate hike in the coming months. <\/p>\n

Another challenge for the central bank is the nature of the economic shock. U.S. tariffs will weigh on exports, jobs and investment in Canada \u2013 all of which would put downward pressure on inflation over time. But Canada\u2019s retaliatory tariffs on $27.6-billion worth of American imports \u2013 scheduled to come into force on Sept. 8 \u2013 will push up prices in Canada. <\/p>\n

A Bank of Canada study<\/a> of Canadian countertariffs imposed last year found that they raised the prices of targeted items by around 6 per cent and added 0.3 per cent to overall CPI inflation at the peak of the price shock.<\/p>\n

In some ways, this is a return to an earlier phase in the trade war. Throughout much of 2025, Mr. Macklem and his team decided not to rely on a central forecast. Instead, they used a range of upside and downside scenarios that hinged on rapidly changing U.S. trade policy. The goal was to pick a path for interest rates that could work for a variety of possible tariff outcomes. Watch for Mr. Macklem to resurrect this approach for this morning\u2019s rate decision. <\/p>\n

Read more about today\u2019s expected Bank of Canada decision.<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: A man checks his phone as he walks past the Bank of Canada…\n","protected":false},"author":2,"featured_media":192614,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[136,902,17,8462,617,8464,137,8463,906],"class_list":["post-192613","post","type-post","status-publish","format-standard","has-post-thumbnail","category-canada","tag-appwebview","tag-aud-growth","tag-canada","tag-live-blog","tag-nopolly","tag-noreadtime","tag-yesapplenews","tag-yespop","tag-yessnap"],"_links":{"self":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/192613","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/comments?post=192613"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/posts\/192613\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media\/192614"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/media?parent=192613"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/categories?post=192613"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/canada\/wp-json\/wp\/v2\/tags?post=192613"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}