OTTAWA — The Bank of Canada held its benchmark interest rate steady again on Wednesday as new U.S. tariffs and the ongoing war in Iran cloud the central bank’s outlook.

The Bank of Canada’s policy rate remains at 2.25 per cent after a seventh straight hold. The move was widely expected by economists.

Bank of Canada governor Tiff Macklem said Wednesday that the persistence of the Middle East conflict has increased inflationary risks as global energy prices continue to float higher.

A new tariff battle with the United States meanwhile threatens Canada’s burgeoning economic rebound, he said. That renewed uncertainty might lead businesses to delay investment and hiring decisions until the trade picture crystallizes.

Because the economy was evolving broadly in line with the bank’s forecasts, governing council opted to keep the policy rate unchanged on Wednesday, Macklem said.

“Monetary policy cannot offset the effects of tariffs or influence global energy prices. What we can do is ensure global developments don’t jeopardize price stability in Canada,” he said.

Monetary policymakers at the Bank of Canada use the policy rate to keep a lid on inflation and support economic growth when prices are contained.

Macklem was tight-lipped in a press conference with reporters after the decision about whether the bank is more concerned about inflation or growth risks in the midst of an uncertain outlook.

“The risks are shifting and we are prepared to adjust monetary policy as needed,” he said.

Inflation was a full percentage point above the Bank of Canada’s two per cent target at three per cent in July. The Iran war drove a volatile period for gas prices over the spring and summer.

Macklem said that’s too high for the bank’s comfort. He said its rate decisions are still guided by its inflation forecast, which will be updated at the next rate announcement on Oct. 28.

Economic growth, meanwhile, has shown signs of rebounding after stagnating for much of the last year. The economy surged with 3.3 per cent annualized growth in the second quarter, though few analysts expect that same pace continued into the current quarter.

The spectre of a re-escalating trade war with the United States loomed over the Bank of Canada’s decision Wednesday.

The United States imposed 50 per cent tariffs on a range of Canadian goods on Aug. 22 and has threatened steeper duties on autos.

Macklem said the central bank doesn’t expect a “large direct impact” on the economy from the newest tariffs, though targeted sectors could be hit hard. He said he expects growth in the fourth quarter will take a hit from the new duties.