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the bank of canada held its key lending rate at 2.25% for the sixth consecutive time as it assesses the repercussions from uncertain u.s. trade and the iran war.
in a prepared statement wednesday, the central bank’s governor tiff macklem said that canada’s economy had grown after stalling over the past year, noting that consumers and businesses are adapting to new trade relations with the u.s.
speaking to reporters, macklem said businesses are reconfiguring their supply chains.
“the other factor is the u.s. economy is strong … they need our exports and you’re seeing u.s. businesses increasingly increase their orders for our canadian exports,” macklem said, per afp.
he said another risk factor influencing the bank’s policy decision is the uncertainty caused by the ongoing conflict in the middle east.
bank monitoring impact of elevated oil prices
in prepared remarks, macklem said the iran war has “dented” global growth, “but with oil prices coming part way back down, growth is expected to recover.”
he said the central banks’ officials have been monitoring the direct effects of higher oil prices on inflation, “but the longer they remain elevated, the bigger the risk they spill over to other goods and services.”
“as we have said before, we will not let higher oil prices become persistent inflation,” macklem said.
if oil prices increase again and remain elevated for an extended period, he said the bank of canada could raise rates to slow inflation.
“i do want to stress though, that’s not our base case,” macklem told reporters, per the canadian press.
“at this moment, our best judgment is, where we are now looks appropriate. but we underlined uncertainty is high and we’re prepared to adjust monetary policy as needed,” he said.
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the next bank of canada rate announcement is scheduled date for sept. 2.
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