The Bank of Canada has held its key interest rate steady at 2.75% as the threat of U.S. tariffs and trade uncertainty hang over the Canadian economy.
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In keeping its trendsetting overnight interest rate at the same level it’s been at since March of this year, Canada’s central bank cited the continued lack of clarity around potential U.S. tariffs and the outcome of Canada-U.S. trade talks that remain ongoing ahead of an Aug. 1 deadline imposed by American President Donald Trump.
“With uncertainty about U.S. trade policy still high, the outlook for the Canadian economy remains clouded,” said the Bank of Canada in announcing its latest interest rate decision. Economists polled by Reuters (TRI) had widely expected the central bank to hold rates steady for a third consecutive time. At 1.9%, inflation is currently just below the Bank of Canada’s 2% annualized target.
News of the latest interest rate decision has leading Canadian stocks such as Shopify (SHOP) and Restaurant Brands International (QSR) trading flat early on July 30.
‘Some Resilience’
President Trump has threatened Canada with potential 35% tariffs on goods and services that are not covered under the current Canada-United States-Mexico Agreement (CUSMA) on trade. The neighboring U.S. is by far Canada’s largest trading partner.
However, despite the potential for high import duties, the Bank of Canada said on July 30 that the Canadian economy is “showing some resilience,” though growth in business and household spending is being restrained by the ongoing uncertainty.
The Bank of Canada’s latest interest rate decision comes on the same day that the U.S. Federal Reserve announces its next rate decision. The Fed is widely expected to also hold rates at current levels. Canada’s central bank is next scheduled to announce a decision on interest rates Sept. 17.
Is SHOP Stock a Buy?
The stock of Shopify has a consensus Moderate Buy rating among 33 Wall Street analysts. That rating is based on 21 Buy and 12 Hold recommendations issued in the last three months. The average SHOP price target of $119.97 implies 3.95% downside from current levels.
