The Bank of Canada has announced it will maintain its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.

Global trade developments—particularly involving the United States—continue to create uncertainty. Although recent U.S. trade policies have begun to take clearer shape, the landscape remains unpredictable. The Bank’s July Monetary Policy Report (MPR) does not include traditional base-case projections for GDP and inflation due to this instability. Instead, it outlines a “current tariff scenario” based on tariffs confirmed as of July 27, along with two alternatives: one assuming further tariff escalation and another assuming de-escalation.

Despite the turbulence in trade flows, the global economy has shown a degree of resilience. In the United States, growth moderated in early 2025, though the labour market remains healthy. Notably, U.S. CPI inflation rose in June, with signs emerging that some tariffs are beginning to feed into consumer prices. The eurozone experienced modest economic expansion, while China’s exports to the U.S. have declined—a trend largely balanced by stronger exports to other regions.

Financial markets have also responded: global oil prices remain close to April levels, equity markets have moved higher, and corporate credit spreads have narrowed. Government bond yields have edged upward. Meanwhile, the Canadian dollar has appreciated, supported by a broadly weaker U.S. dollar.

In this current tariff scenario, global growth is expected to slow slightly to about 2.5% by the end of 2025, before recovering to around 3% in 2026–2027.