What to expect from September's Bank of Canada interest rate update
Canadians will be watching closely as the Bank of Canada (BoC) is set to announce interest rates this September.
In July, Canada’s central bank held its key interest rate at 2.25 per cent once again. At the time, the Crown corporation stated that the economy was showing “signs of improvement,” with growth picking up and inflation expected to ease gradually. However, it also flagged the continued risks and uncertainties due to the Middle East war and the U.S. trade policy.
“Oil prices are still lower than their peak in April, but the situation in the Middle East remains volatile,” it had stated. “The path for global inflation is highly dependent on how the conflict unfolds.”
It had also noted that consumer spending remained solid, while the housing market, despite continued weakness, was showing signs of stabilizing as the economy adjusted to tariffs and ongoing uncertainty.
But with tensions between Canada and the U.S. heating up again amid the ongoing trade war, what can Canadians expect from the upcoming rate decision? Here’s what one expert predicts ahead of the BoC’s announcement on Wednesday, Sept. 2.
Will the Bank of Canada change the interest rate?
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According to Clay Jarvis, NerdWallet Canada’s mortgage and financial expert, the BoC is still likely to hold its 2.25 per cent overnight rate at its Sept. 2 announcement, despite the “reignited trade war” with the U.S.
“The current standoff with the U.S. is dramatic and awful and frightening, but it’s too fresh to impact the Bank’s thinking,” he said in a statement.
Jarvis noted that while Canadian consumers face affordability challenges, the economy has remained “remarkably resilient.” Employment has also surprised to the upside — the unemployment rate fell by 0.1 per cent to 6.4 per cent in July, according to Statistics Canada.
“The Bank may be forced to act if Trump’s tariffs damage Canadian industry, but they’ll require a few months of data before they can discern the true fallout of this idiotic trade war,” he said.
With files from Isabelle Docto