The Bank of Canada held its policy rate at 2.75% in June, citing persistent trade uncertainty and mixed signals on inflation and economic activity.

• Q1 GDP rose 2.2% QoQ annualized, slightly above forecasts, driven by export pull-forwards and inventory gains, while final domestic demand was flat.
• CPI inflation fell to 1.7% in April due to the removal of the federal carbon tax; excluding taxes, inflation rose to 2.3%.
• Core inflation measures ticked up, and businesses expect to pass on tariff-related cost increases to consumers.
• The unemployment rate increased to 6.9%, with job losses concentrated in trade-exposed sectors.
• The Bank signaled caution amid upside inflation risks and downside growth risks, awaiting further clarity on US trade policy impacts.
• Key quote: “With uncertainty about US tariffs still high, the Canadian economy softer but not sharply weaker, and some unexpected firmness in recent inflation data, Governing Council decided to hold the policy rate as we gain more information on US trade policy and its impacts.”