Overview

• The Bank of Canada held its key policy rate at 2.75% on July 30, marking a third straight pause.
• Meeting minutes reveal a divided Governing Council with some members saying rates have reached the midpoint of neutral and others warning more easing may be needed if economic slack lingers.
• Policymakers agreed that monetary policy is ill-suited to offset tariff-driven supply shocks and noted the worst-case tariff scenario has not materialized.
• The minutes reported that inflation expectations remain anchored and spillovers from weaker export demand into investment, employment and household spending have been limited so far.
• Money markets assign roughly a 67% chance of another pause at the Sept. 17 decision as governors await clearer U.S.-Canada trade signals before adjusting policy.