The Bank of Canada remains unchanged for the sixth consecutive time, Governor Macklem says the economy still faces high uncertainty.

The Bank of Canada announced on Wednesday that it would keep its benchmark interest rate unchanged at 2.25%, marking the sixth consecutive time it has held steady, in line with market expectations. The Bank of Canada stated that despite a weak economic performance at the beginning of the year, economic growth is expected to reach an annualized rate of 2.5% in the second quarter as temporary factors weighing on the economy fade. Bank of Canada Governor Tiff Macklem said in a prepared speech that the Canadian economy still faces high levels of uncertainty, but central bank officials are becoming more confident that the economy will gradually overcome obstacles such as tariff adjustments and slowing population growth. He noted that while the Governing Council remains prepared to adjust the policy rate when necessary, the current rate of 2.25% is appropriate to help bring inflation back to the 2% target while supporting economic recovery. Canada experienced an unexpected economic contraction at the beginning of the year, exceeding the Bank's expectations. The Bank had previously forecasted a 1.5% growth rate for the economy in the first and second quarters of the year. Macklem stated that over the past year, Canada's GDP has barely grown, primarily due to new tariffs, ongoing uncertainty, and a slowdown in population growth. In its latest monetary policy report, the Bank noted that the temporary impact on automobile production and unexpected delays in government spending progress in the first quarter are expected to reverse in the coming months. The Bank currently forecasts a 2.5% annualized growth rate for the Canadian economy in the second quarter. In terms of inflation, global energy price shocks triggered by the conflict between Iran and the US pushed Canada's inflation rate up to 3.2% in May, with gasoline prices seeing a sharp increase in the spring. However, the Bank stated that excluding gasoline prices, overall inflation remains close to the 2% target level, indicating that the rise in energy prices has not significantly spread to other consumer goods and services. As tensions between the US and Iran escalate once again, international oil prices have recently risen. The Bank of Canada warned that gasoline prices are expected to continue to fluctuate sharply and will be highly dependent on developments in the Middle East.