Bank of Canada Holds Steady: Economic Growth Resumes Amid Trade Headwinds

The Bank of Canada has maintained its benchmark rate at 2.25%, as expected, predicting economic recovery in the latter half of the year. Despite growth disruptions caused by the Middle East conflict and U.S. trade policy, the bank forecasts a 2.5% economic growth in the second quarter.

The Bank of Canada left its key overnight rate unchanged at 2.25% on Wednesday, projecting a stronger economic performance in the latter half of the year as inflation pressures ease.

Governor Tiff Macklem expressed a more optimistic economic outlook, expecting annualized growth of 2.5% in the second quarter following a standstill caused by geopolitical tensions and trade uncertainties with the U.S.

While the central bank has slightly adjusted its future growth and inflation forecasts, it remains cautious in response to potential risks, such as fluctuating oil prices and Canada's trade relationship with the U.S.