The Bank of Canada held its benchmark interest rate steady on Wednesday at 2.25 per cent, in a move widely expected by economists.

Canada’s central bank has been on hold since December 2025, with Wednesday’s announcement marking its seventh consecutive decision to leave its trend-setting policy rate unchanged.

In its decision, the bank said recent data confirms its prediction for a “broadening recovery” in the economy. However, policymakers also said the risks of higher inflation have increased — citing new U.S. tariffs and the escalating U.S.-led war with Iran.

“With the Middle East conflict still ongoing, and little progress reopening the Strait of Hormuz, upside risks to the bank’s inflation forecast have increased,” bank officials said on Wednesday.

“The longer that high oil prices and elevated refinery margins persist, the greater the risk of spillover to the prices of other goods and services.”

U.S. benchmark oil prices have soared about 13 per cent since the bank’s last announcement in July. The U.S.-led war in Iran has intensified in recent weeks, resulting in slower tanker traffic through the Strait of Hormuz, a critical maritime passageway for oil to reach global markets.

At the same time, the Canada-U.S. trade war has escalated significantly since the bank’s prior meeting in July.

Last month, U.S. President Donald Trump imposed 50 per cent tariffs on about $28 billion worth of Canadian products. Starting Sept. 8, Canada will match those levies with dollar-for-dollar tariffs on $27.6 billion of comparable U.S. goods.

Last week, the federal government rolled out a $7.5-billion expanded economic relief program for impacted workers and businesses. The new supports are on top of the nearly $25 billion in tariff support it implemented over the past 18 months.

‘Uncertainties over trade’

CIBC chief economist Avery Shenfeld said Wednesday’s hold was no surprise “amidst the fog of a trade war.”

“Newly heightened uncertainty over trade relations clouds that picture too much to be definitive about what lies ahead,” Shenfeld wrote in a research note published after the decision.

“The bank did judge that the direct impact of the latest tariff round would not be large, but cited the uncertainties over trade as being a further drag,” he added.

“It didn’t mention the downside implications of a failure to lower the existing tariffs on autos, metals and lumber that most economic projections were assuming would take place.”

A Reuters poll of economists taken on Aug. 22 found all 35 participants expected policymakers to leave the bank’s key rate in place.

The Bank of Canada’s next rate announcement is scheduled for Oct. 28.