MONTREAL, Canada, Sept 2, (V7N) - Canada's central bank on Wednesday left its benchmark interest rate unchanged at 2.25 percent for the seventh straight time but warned of possible consequences from the trade war with the United States.
New tariffs imposed by US President Donald Trump make the growth outlook more uncertain while the risks of accelerating inflation have increased, the Bank of Canada said.
The interest rate decision was expected, and comes after an economic rebound in the April-June quarter, when gross domestic product expanded 3.3 percent on an annual basis, after two lackluster quarters.
"Uncertainty is high and new US tariffs and threats of further action pose risks to the sustainability of the recovery," the Bank of Canada said in a statement.
Prime Minister Mark Carney broke off trade talks with the US on August 21, prompting Trump to slap Canada with new tariffs. Canada in turn retaliated with tariffs on American products.
Both of these measures will raise costs for some businesses and could lead to higher consumer prices over time, the central bank statement warned.
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