Bank of Canada warns of rising inflation risks from fuel costs and U.S. tariffs

The Bank of Canada kept its benchmark interest rate at 2.25% on Wednesday, a decision economists had broadly expected. Governor Tiff Macklem said inflation risks are increasing because of higher energy prices and new U.S. tariffs, even as the central bank sees signs of a broader economic recovery. Macklem said the Middle East conflict is putting upward pressure on oil prices, which has already filtered into Canadian gasoline costs. He also said tariffs on both sides of the CanadaU.S. trade dispute are adding costs for some businesses, though the bank считает the direct impact of the latest countertariffs to be relatively limited. Canada’s inflation rate rose to 3% in July, above the Bank of Canada’s 2% target. The central bank said in its statement that trade uncertainty and higher fuel prices are complicating the outlook, while economists remain divided on how policy could evolve later in the year.