The Bank of Canada (BoC) has revealed, through minutes from its July 30 policy meeting, that officials were split on whether the current 2.75% benchmark interest rate is already providing sufficient economic support to help Canada weather the impact of newly imposed U.S. tariffs.

Some policymakers argued that the rate is already accommodative enough and that further cuts could risk fueling inflationary pressures, especially given the delayed effects of monetary policy. They cautioned that acting too aggressively now might create more problems later, particularly if the economy stabilizes on its own.

Others within the BoC, however, maintained that additional easing could still be required—especially if early signs of labour market weakness worsen or if trade disruptions start to drag on business investment and consumer spending.

While the central bank acknowledged some trade-related uncertainty, it noted that so far there has been little measurable impact on consumer demand or capital investment. Given the mixed signals, the BoC opted to hold rates steady in July, adopting a “wait-and-see” approach.

Markets are now watching closely for the BoC’s next decision on September 17, with expectations leaning toward another pause, unless fresh economic data suggests a sharper slowdown.

The debate underscores the challenge facing the Bank of Canada: balancing the need to cushion the economy from external shocks while preventing a resurgence of inflation—especially in an environment where trade policy remains unpredictable.