Wednesday July 30, 2025 | VICTORIA, BC [Posted at 9 am PT | Updated at 10:05 am PT | Updated July 31, 2025]
Socioeconomic analysis by Mary P Brooke | Island Social Trends
The Bank of Canada has maintained its overnight interest rate at 2.75% today. There was a “clear consensus” for that stance, said Bank of Canada Governor Tiff Macklem.
“With still high uncertainty, the Canadian economy showing some resilience, and ongoing pressures on underlying inflation, Governing Council decided to hold the policy interest rate unchanged,” the Bank’s rate announcement revealed at 6:45 am (PT) today.
Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers addressed the media today from Toronto.
Not changing the interest rate was expected by most economic observers as there is too much uncertainty in the economic under conditions of the tariff trade war launched by the United States at the start of 2025.
The Bank of Canada identified uncertainty in its announcement last month. This month “the impact of tariffs” is the new uncertainty, but Macklem says there could be upward pressures on consumer prices.
This is “a period of global upheaval”, said Macklem today.
What could lead to a lower interest rate:
“If a weakening economy puts further downward pressure on inflation and the upward price pressures from trade disruptions are contained, there may be a need for a reduction in the policy interest rate,” said Macklem today.
Too cautious:
Ontario Premier Doug Ford says he is “shocked” at no lowering of the interest rate today. Ford posted in social media:
“I’m shocked by this decision. As we stare down economic uncertainty that’s putting hundreds of thousands of jobs at risk, it’s never been more important to stimulate economic growth and keep Canadians working. Rather than wait around and let President Trump’s tariffs do even more damage to our economy, the Bank of Canada needs to cut interest rates now.”
Ford leads this country’s largest provincial economy, much of it involving trade with the United States.
Current conditions:
This month the Bank identified ‘some’ domestic resilience to U.S. trade disruptions but also “ongoing pressures on underlying inflation”. In other words, things aren’t getting any easier for more businesses and households in Canada.
There was “excess supply” in the second quarter, which slows things down in the economy. There is still CPI inflation in food”and some more to come there” (i.e. still increases to come in grocery pricing).
On the global front, that Bank states today that “the global economy has been reasonably resilient”. This is said as countries fall in line with US tariff demands (e.g. European Union agreeing to 15% tariffs across the board).
“Overall, monetary policy is going to continue to support the economy while ensuring that inflation remains well controlled,” said Macklem today about the Bank of Canada’s role in all this.
Macklem said that essentially any level of tariffs are detrimental to the Canadian economy. At the very least, trade activity slows down.
Macklem said that inflation is “close to the two percent target”.
Three scenarios:
The Bank today presented three possible scenarios.
- The first is being called a current tariff scenario: “how growth and inflation would evolve if the trade arrangements currently in place were agreed and to remain”.
- “The two other scenarios examine how things could play out if tariffs escalate, or if the deescalate from where they are now,” said Macklem in his introductory remarks today.
Regional and household survey outreach:
The Bank put forth today that they are “ready to respond to new information”, and that includes their work to gain more regional information and to do “survey outreach” with households.
Rate change perspective:
While anyone would likely want to pay less interest on an investment or loan, any interest rate change at this time would probably just complicate matters for investors, businesses and mortgage holders.
A supposed deadline of August 1 looms for ‘making a deal’ between Canada and the United States. But that date could easily come and go. In other words, more uncertainty.
Next interest rate announcement in September:
The next interest rate announcement comes up on September 17, as part of the 2025 rate announcement schedule:
- Wednesday, January 29
- Wednesday, March 12
- Wednesday, April 16
- Wednesday, June 4
- Wednesday, July 30
- Wednesday, September 17
- Wednesday, October 29
- Wednesday, December 10
===== RELATED:
- NEWS SECTIONS: BANK OF CANADA | BUSINESS & ECONOMY | TARIFFS & TRADE
- Bank of Canada may coast along with July 30 announcement (July 14, 2025)
- June 4: Bank of Canada holds interest rate at 2.75% (June 4, 2025)
- Bank of Canada holds interest rate at 2.75% on April 16 (April 16, 2025)
- Bank of Canada Governor: more uncertainty, tough decisions as trade war escalates (March 20, 2025)
- Bank of Canada drops interest rate to 2.75% (March 12, 2025)
- Significant interest rate drop needed on March 12 (February 26, 2025)