The Bank of Canada opted to keep its key interest rate unchanged today, citing persistent tariff uncertainty and an unclear global economic outlook.

Governor Tiff Macklem acknowledged that while inflation is easing and economic growth remains tepid, the risks associated with new trade tensions are too significant to ignore.

“The future is no clearer,” Macklem said during a press conference following the decision. “We are proceeding carefully in an environment where the economic signals are mixed.”

The central bank’s benchmark interest rate remains at 4.50%, a level it has maintained since earlier this year after a series of hikes to tame inflation.

Many economists had expected a rate cut, pointing to weaker consumer spending, a cooling housing market, and declining business investment.

However, the resurgence of tariff threats, particularly between major trading partners, has introduced new volatility into global markets, prompting the Bank to hold its ground for now.

Macklem emphasized that the Bank of Canada remains prepared to adjust monetary policy if needed but prefers to wait for more clarity.

“Further cuts are still possible, but we need to be sure that inflation pressures continue to subside and that global trade dynamics do not deteriorate further,” he said.

The Bank’s decision comes at a time when central banks around the world are weighing similar dilemmas, balancing the need to stimulate growth without reigniting inflation.

In its latest Monetary Policy Report, the Bank lowered its GDP growth forecast for the year and highlighted increased downside risks tied to international trade disputes.

Markets responded with caution, with the Canadian dollar dipping slightly against the U.S. dollar following the announcement.

Economists generally expect the Bank of Canada to begin cutting rates later this year if economic data continues to weaken and if inflation remains under control.

For now, Canadians can expect borrowing costs — including mortgage rates — to remain relatively stable through the summer months.