OTTAWA — The Bank of Canada held its key interest rate at 2.25 per cent again, citing “a broadening recovery in Canada’s economy” in the face of uncertainty about the trade war with the United States.

Recent economic readings have been encouraging, the bank said in its announcement, but “the upside risks to inflation have increased, while new tariffs make growth prospects more uncertain.” On balance, though, it’s staying the course.

The central bank’s trend-setting rate, which influences everything from mortgage costs to corporate bond yields, hasn’t moved since October 2025. Global economic upheavals’ effects on the Canadian economy have roughly cancelled each other out every time the bank’s governing council has debated whether to change the rate.

The council tries to use the interest rate to keep inflation under control without stifling genuine economic growth. In general, when the economy is doing well, the bank thinks about raising interest rates to keep growth from giving way to higher prices and costs without any real increase in prosperity behind them; when the economy is weak, the council thinks about lowering interest rates to goose borrowing and spending.

Supply disruptions from the U.S.’s war on Iran and the Trump administration’s increasing belligerence toward Canada since trade talks broke down in August are obvious menaces to the Canadian economy, but they don’t seem to be hurting it too badly yet.

If anything, the Canadian economy’s strong real-life performance in the second quarter—posting a 3.3 per cent annualized growth rate, according to Statistics Canada.

Inflation is higher than the central bank’s target rate of two per cent, but much of the excess is from gasoline prices that have been sent higher by the Iran war and the blockades of the Strait of Hormuz. Raising interest rates wouldn’t bring those prices down.

Despite the positivity in the second quarter numbers, the bank said, “demand for labour remains subdued and indicators point to continued excess supply in the economy.” Inflation comes from the opposite—excess demand, with too much money chasing too few goods—so although inflationary pressures are increasing, they’re not here yet.

This story will be updated.