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On June 4, 2025, the Bank of Canada (BoC) maintained its key policy rate at 2.75%, marking its second straight pause since April 2024. Governor Tiff Macklem stated there was a “clear consensus to hold policy unchanged” to gather further economic data. Since June 2024, the BoC has cut rates by a total of 225 basis points—more than any other major central bank.

The Bank pointed to several global and domestic influences. The volatility of U.S. tariff policies—particularly the recent fluctuations, including trade relief measures and new levies on steel and aluminum—has created uncertainty, even as some tariffs eased. Meanwhile, April’s headline inflation fell to 1.7% largely due to a carbon tax removal, yet underlying core inflation rose to 2.3%, suggesting persistent price pressures. This firmness in core inflation is unusual at a time when the economy expects rate cuts, reinforcing BoC’s caution.

Analysts at Canada's major banks largely predicted a hold: Scotiabank leans towards a steady rate, while RBC and TD see cuts later in 2025. CIBC and BMO anticipate eventual reductions—CIBC expects cuts in July and September, while BMO foresees easing by year’s end. Despite this varied outlook, the BoC emphasized the need for caution amid ongoing economic and trade uncertainties. Their next scheduled decision is July 30, 2025, at which point they may reassess based on inflation trends and international developments.

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