The Bank of Canada has announced for the third consecutive time that it will maintain the benchmark interest rate. However, if the economy worsens, it may still reduce interest rates.

The Bank of Canada announced on Wednesday that it will maintain the benchmark interest rate at 2.75%, marking the third consecutive meeting without a change. This decision was in line with the expectations of the market and economists. In its statement, the central bank emphasized that despite the uncertainty brought by the U.S. tariffs, if the economy further weakens and inflation pressures are under control, further rate cuts may still be possible. Governor Tiff Macklem stated that although core inflation has rebounded recently, the sustainability of this trend is uncertain. Additionally, the appreciation of the Canadian dollar is suppressing import costs, and there are signs of easing in the job market, which could help alleviate wage pressures. He pointed out, "Considering all indicators, recent inflation increases may gradually decline." Following this news, the yield on the two-year Canadian government bonds dropped to 2.773%, and the Canadian dollar first fell and then rebounded. The market interpreted this statement and Macklem's remarks as "dovish," indicating that the central bank holds a more accommodative stance towards future policies. Despite strong recent data on core inflation and employment, the market had temporarily lowered expectations for future rate cuts. However, the central bank did not reference the core inflation indicator "median" this time, but highlighted that the overall inflation pressure is around 2.5% annually. Macklem stated that the Governing Council had reached a "clear consensus" on maintaining the interest rate issue and will continue to "proceed cautiously." Regarding the U.S.-Canada trade situation, the central bank presented three economic scenarios: under the current tariff levels, economic growth is expected to rebound to 1% in the second half of the year; if the U.S. reduces tariffs on non-U.S.-Mexico-Canada Agreement goods and Canada lifts retaliatory tariffs, growth will be further boosted; however, if the trade war escalates, the Canadian economy will shrink, and inflation pressures will increase. Additionally, the central bank predicts that the inflation rate in 2025 will decrease from the initial forecast of 2.3% to 1.9%, partially reflecting the impact of the federal government canceling the carbon tax on consumers. Analysts from the National Bank of Canada stated that while the central bank did not explicitly signal a rate cut at the September 17 meeting, the current policy language does not mark the end of the accommodative cycle. Economists from the TD Bank Group believe that future economic data will be more critical than the wording of this statement. During the press conference, Senior Deputy Governor Carolyn Rogers added that the central bank's asset-liability management program remains unchanged, with the target settlement balance range still between 50 billion and 70 billion Canadian dollars. Macklem concluded by noting that despite the recent partial trade agreements reached by the Trump administration with several countries, reducing global trade war risks, these agreements still imply that the U.S. has not returned to an "open trade" model. He stated that the effective tariff rate on Canadian exports to the U.S. has increased by about 5 percentage points since the beginning of the year, and the uncertainty in the Canada-U.S. trade situation is suppressing consumer and business spending intentions.