The Bank of Canada has decided to maintain its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%. This decision comes amid ongoing uncertainty in global trade dynamics, particularly between China and the United States.

Since April's Monetary Policy Report, there have been shifts in tariffs by the US administration, and while China and the US have eased some tariffs, negotiations remain uncertain. "Uncertainty remains high," as new trade actions are still being threatened.

Globally, economic resilience is noted but partly attributed to a temporary surge in activity due to tariff concerns. In the US, strong domestic demand contrasts with higher imports that impacted first-quarter GDP negatively. Inflation in the US has decreased slightly but remains above 2%. European growth is supported by exports and increased defense spending, whereas China's economy faces slowing growth due to diminishing fiscal support effects and high tariffs impacting exports.

In Canada, first-quarter economic growth was reported at 2.2%, slightly exceeding forecasts. The increase was driven by export activities to the US and inventory accumulation. Business investment saw unexpected strength despite a slowdown in consumption growth from a previously strong pace. Housing activity declined sharply due to reduced resales, government spending fell, and unemployment rose to 6.9%.

CPI inflation decreased to 1.7% in April following the removal of a federal consumer carbon tax which lowered inflation by 0.6 percentage points; excluding taxes, inflation rose by 2.3%. The Bank's core inflation measures moved up slightly stronger than expected.

With ongoing uncertainties regarding US tariffs affecting Canadian exports and broader economic impacts on investment and employment sectors being monitored closely, Governing Council chose not to adjust rates immediately as more information on trade policy becomes available.

Governing Council will continue evaluating risks including how much higher US tariffs might reduce Canadian export demand or influence business investments along with household spending trends: "We are focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval."

The next announcement regarding overnight rate targets is scheduled for July 30th when an updated Monetary Policy Report will also be published.