Bank of Canada Expected to Keep Interest Rates Steady for the Seventh Time

On September 1, the market widely anticipates that the Bank of Canada will maintain its benchmark interest rate at 2.25% this Wednesday, marking the seventh consecutive time the bank has kept rates unchanged. The United States has imposed a 50% tariff on approximately $20 billion worth of Canadian goods, and Canada plans to retaliate with tariffs on certain U.S. products starting September 8. Due to rising oil prices, Canada's overall inflation rate has surged to 3%, reaching a new high for 2023, putting the central bank in a stagflation dilemma. Although the annualized GDP growth rate rebounded to 3.3% in the second quarter and over 180,000 jobs were added from May to July, the trade war has led about two-thirds of surveyed economists to lower their corporate investment expectations. The market expects that the next interest rate hike by the Bank of Canada may not occur until the first half of 2027.

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