Live updates: Bank of Canada expected to hold key interest rate as trade war with U.S. escalates — SkimNews
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- Bank of Canada is expected to hold its policy rate at 2.25% for the seventh straight time, with all 35 economists polled by Reuters forecasting no change at today's decision.
- Interest rate swap markets price roughly a 60% chance of a quarter-point hike in December and are fully pricing in a January 2027 hike, followed by two more hikes later that year, according to Bloomberg data.
- Canadian bond yields have surged, with 30-year Government of Canada yields breaking 4% for the first time since 2010 and five-year yields — which underpin many fixed-rate mortgages — sitting around 3.35%.
- Canada is set to impose retaliatory tariffs on $27.6 billion of U.S. imports on Sept. 8, and a BoC study found last year's Canadian countertariffs raised targeted item prices by roughly 6% and added 0.3% to overall CPI at the peak.
- Governor Tiff Macklem and his team may resurrect the scenario-based forecasting approach used throughout much of 2025, which avoided relying on a single central forecast as U.S. trade policy shifted rapidly.
- Kevin Warsh's debut as U.S. Federal Reserve Chair — marked by wavering hawkish and dovish commentary — is cited as one of the factors roiling global bond markets, alongside ballooning fiscal deficits and Middle East energy-price-driven inflation concerns.
- Forty-nine BoC security guards represented by the Public Service Alliance of Canada have been on strike since June 23, forcing the central bank to cancel its in-person press lock-up for the second consecutive time and hold the post-decision press conference remotely.
Why it matters: With retaliatory tariffs on $27.6 billion of U.S. goods set to hit Sept. 8 and 30-year Canadian bond yields above 4% for the first time since 2010, the BoC faces a split mandate: tariffs push prices up while export-sector weakness drags the economy down, and Macklem's rate path must hedge both risks simultaneously.
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