Bank of Canada expected to hold key rate at 2.25% in September

The Bank of Canada is expected to keep its key overnight rate at 2.25 per cent when it announces its next decision on Sept. 2, according to NerdWallet Canada mortgage and financial expert Clay Jarvis.

The central bank held the rate at 2.25 per cent in July, citing signs of improving economic growth and expectations that inflation would ease gradually. It also warned that the Middle East war and U.S. trade policy continued to create risks and uncertainty.

The bank said oil prices remained below their April peak but that conditions in the Middle East were volatile, making the outlook for global inflation dependent on how the conflict develops. It also reported solid consumer spending and early signs of stabilization in a still-weak housing market as the economy adjusts to tariffs and uncertainty.

Jarvis said the renewed Canada-U.S. trade dispute was too fresh to materially affect the Sept. 2 decision. He said the economy has remained resilient despite affordability pressures, pointing to Statistics Canada data showing the unemployment rate fell 0.1 percentage points to 6.4 per cent in July.

He said the bank could be compelled to respond if U.S. tariffs damage Canadian industry, but would need several months of data to assess the effects.