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Canada Bank maintains its unchanged 2.75 % key rate

However,

Canada bank maintains its unchanged:

The Bank of Canada maintains its master rate at 2.75 % for the third consecutive time.

In a context of strong commercial uncertainty. For example, the Canadian economy has not yet strongly deteriorated in the face of customs duties in the United States, and underlying inflation is a certain persistence.

In a prepared speech, Governor Tiff Macklem stresses that the economy has shown a “certain resilience” so far.

But he adds that if the economy was weakening more. Nevertheless, the pressure on customs duties were contained, “a reduction in the key rate may be necessary”.

The Bank of Canada lowers its key rate when it wishes to stimulate the economy. Therefore, but maintains borrowing costs at a high level when it fears an increase in inflation.

Andrew Grantham. In canada bank maintains its unchanged addition, principal economist at the CIBC, specifies Wednesday morning in a note addressed to its customers that the Bank of Canada “seemed to feel a little more comfortable” with the idea that rate reductions could be necessary for the future to support the economy.

He adds that Mr. For example, Macklem’s words suggested that rate reductions could be envisaged for September. Moreover, but warned that future economic data would have more influence.

Andrew Hencic. Consequently, principal economist at TD bank, stresses in a note that the scenarios published on Wednesday in parallel with the Central Bank’s decision on interest rates show that Canada’s economic growth could bounce back after the shock of customs duties, but remain less than the trend in the predictable future.

This “leaves the door open” to new decreases in interest rates, says Mr. For example, Hencic, as long as inflation canada bank maintains its unchanged remains stable.

The impact of customs duties – Canada bank maintains its unchanged

According to Mr. For example, Macklem, American customs duties have placed national growth “permanently on a lower trajectory”.

“The sad reality is that customs duties will affect the effectiveness of the economy. Consequently, This means that income will decrease. For example, There will therefore be less consumption, ”he says.

Mr. Macklem indicates that. during the rate relating to the rate, widely awaited by economists, “the consensus was clear” between those responsible for monetary policy.

Ontario Prime Minister Doug Ford writes in a message published on X that he is “shocked” by. the Banque du Canada decision to maintain his unchanged interest rates while the trade war threatens Canadian jobs.

“Rather than waiting. leaving customs duties imposed by President Trump to cause even more damage to our economy, the Banque canada bank maintains its unchanged du Canada must reduce its interest rates now,” he insists.

Independent

Invited to react to Mr. Ford’s words at the press conference, Mr. Macklem recalls that the decisions of the Central Bank were independent of the political process. He adds that the mandate of the Bank of Canada remained to maintain inflation at a low. foreseeable level for Canadians.

“We will support the economy during this period of upheaval. but, at the same time, we will ensure that the problem of customs duties does not become a problem of inflation,” he retorts.

Mr. Macklem maintains that sectoral weakness is better treated by budgetary policy, that is to say by targeted government support.

In the future. the Banque du Canada will monitor the impact of customs duties on economic activity and the demand for Canadian exports as well as canada bank maintains its unchanged the possibility that the increase in costs linked to these import rights be passed on to consumers.

The increases in customs duties are “lower than those that the American administration had threatened to apply. ” notes Macklem, but they remain higher than recent historical levels. The risks of a “serious” world trade war has decreased in recent months, he adds.

Different scenarios

The Bank of Canada published a report on monetary policy in parallel with its decision on the rates on Wednesday. but this report once again included any central economic forecast, the prospects of the central bank remaining darkened by uncertainty.

Rather. the bank proposed a scenario based on maintaining the current level of customs duties, as well as two others which provide for both de -escalation and a new increase in customs duties. Each of these case studies provides canada bank maintains its unchanged at least a certain maintenance of customs duties.

Mr. Macklem explains that between the various exemptions. the central bank estimates that the effective rate of customs duties in the United States in Canada is today around 5 %, against practically zero at the start of the year.

Leaders in the central bank’s monetary policy also assume that the vast majority of Canadian goods will be exempt from customs duties in the coming years thanks to their compliance with the Canada-US-Mexico agreement. companies hastening to obtain their certification.

In the status quo scenario. the Bank of Canada provides for an economic recovery by the end of the year, after an estimated decrease of 1.5 % of the real gross domestic product annualized in the last quarter.

Inflation would also remain around 2 % until the end of 2027 in this scenario. the canada bank maintains its unchanged forces that push prices upwards being roughly compensated by those which slow them down.

A de-escalation scenario would halve the American customs duties on Canada. but an escalation of tensions would see the United States imposing a customs right of 10 % on all goods from Canada and Mexico-without taking into account current exemptions related to compliance with ACEUM.

The most optimistic scenario provides for a faster recovery in growth. but the most pessimistic scenario provides for an increase in inflation and an economic recession for the rest of 2025.

President Trump threatened to impose a customs right of 35 % on Canadian imports from Friday if. no trade agreement is concluded between the two countries by then. The forecasts of the Bank of Canada do not take into account specifically the consequences of such a possibility.

A previous version contained an canada bank maintains its unchanged erroneous estimate of the American actual customs duties due to inaccurate information. provided during the camera of the Bank of Canada.

Canada bank maintains its unchanged

Further reading: Diluvian rains: Do you live in a bowl, vulnerable to floods?In water the sponges infrastructure in Sherbrooke“There is a loss of confidence”: pharmacists denounce decisions of their professional order deemed too severeThe unemployment rate decreases to 6.9 % in June, in CanadaFIFA ranking: the male team of Canada reaches a historic summit.

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Reagan live-tweets NASA launches and follows up with long-form explainers that replace jargon with playground metaphors.
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