For the second consecutive month, the Bank of Canada is keeping the overnight interest rate at 2.75%, with Governor Tiff Macklem citing significant uncertainty surrounding the outcomes of trade negotiations.

For the second consecutive month, the Bank of Canada has opted to hold its overnight interest rate at 2.75 per cent. The decision comes at a time of mounting economic challenges, with Governor Tiff Macklem navigating a complex landscape shaped by trade tensions and inflationary pressures.

In his opening statement, Macklem described the current economic climate as one of “unusual uncertainty,” highlighting the difficulty of predicting inflation and the evolving global trade environment. This cautious tone reflects the central bank’s concern over potential fallout from international developments—especially those stemming from its largest trading partner, the United States.

Back in March, the central bank lowered the interest rate by 25 basis points in an effort to support economic growth. However, in April, the Bank chose to maintain the 2.75 per cent rate, signaling a shift toward controlling inflation amid rising concerns about a possible recession, particularly if trade relations continue to deteriorate.

Much of the uncertainty centers around newly imposed U.S. tariffs. On Tuesday, President Donald Trump signed an executive order doubling tariffs on steel and aluminum imports to 50 per cent—industries that are crucial to the Canadian economy. The move has sparked fresh speculation over whether the Bank of Canada might consider further rate cuts in the near future to cushion the blow.

For now, however, Macklem and his team are holding steady, walking a tightrope between stabilizing prices at home and preparing for external shocks. With trade negotiations still unresolved and inflation remaining volatile, all eyes will be on the Bank’s next move in the months ahead.