By Paul Vieira
OTTAWA--Senior Bank of Canada policymakers identified the pending U.S.-led review of the existing North American trade treaty as an "important risk" to the economic outlook, according to minutes published Wednesday.
The seven members of the central bank's governing council, led by Gov. Tiff Macklem, said the risks to the outlook have moved higher, given renewed geopolitical tensions and elevated uncertainty over Trump administration trade policy.
Senior officials "agreed that holding the policy interest rate at its current level was conditional on the economy evolving in line with their outlook," according to the minutes, which covered deliberations starting Jan. 20 toward the Jan. 28 policy decision, which kept the benchmark interest rate unchanged at 2.25%.
As a result, "it was difficult to predict the timing and direction of the next change in the policy rate," according to the minutes.
Most economists and market participants expect the Bank of Canada to keep its main interest rate unchanged through 2026, with rate increases starting in the second quarter of 2027. Macklem said last week that additional rate cuts won't necessarily help an economy under pressure from trade friction with Washington, advances in artificial intelligence and lower population growth. Analysts interpreted those remarks as Macklem setting a high bar for additional rate relief.
Central bank officials have said the policy rate, at 2.25%, is at a level that provides some stimulus to the economy while guarding against upward inflation risks stemming from hefty U.S. tariffs.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
02-11-26 1345ET
