Affected by the US Canada trade friction and inflation, the market expects the Bank of Canada to maintain interest rates unchanged

On September 1st, due to the escalation of trade frictions between the US and Canada and the rise in energy prices, the market expects the Bank of Canada to hold its benchmark interest rate unchanged at 2.25% for the third time in a row this week. At present, the United States has imposed a 50% tariff on approximately $20 billion worth of Canadian goods, and Canada plans to impose retaliatory tariffs on some American goods starting from September 8th. Canada's overall inflation rate has risen to 3%, reaching a new high since 2023. Although Canada's annualized GDP growth rate rebounded to 3.3% in the second quarter, with over 180000 new jobs added from May to July, the trade war has caused about two-thirds of surveyed economists to lower their expectations for corporate investment. The market expects the next rate hike by the Bank of Canada to be in the first half of 2027.