Bank of Canada Faces Growth And Inflation Pressure From U.S. Tariffs

According to CNBC, the Bank of Canada is confronting weaker growth and higher inflation as retaliatory tariffs follow the collapse of trade talks with the United States, and it is due to announce its latest interest-rate decision at 9:45 a.m. ET on Wednesday. U.S. President Donald Trump's trade war includes 50% tariffs on a wide range of Canadian goods, while Canada has announced retaliatory tariffs set to take effect on Sept. 8 and affecting more than $20 billion in goods. The Bank of Canada left its benchmark rate unchanged at 2.25% in July for a sixth straight decision, after the Canadian economy grew 0.8% in the second quarter and headline inflation rose to 3% in July from 2.8% in June. Bank of America economist Carlos Capistran said the central bank is likely to keep a cautious tone and continue assessing the economy and inflation outlook, while Goldman Sachs forecast a 0.3 percentage point drag on Canadian GDP growth and a 0.3 percentage point boost to inflation from Trump's tariffs.