OTTAWA, June 4 (Xinhua) -- The Bank of Canada on Wednesday maintained its policy rate at 2.75 percent, citing U.S. tariffs as a key factor.
The central bank said in a news release that with uncertainty about U.S. tariffs still high, the Canadian economy softer but not sharply weaker, and some unexpected firmness in recent inflation data, it had decided to hold the policy rate.
"The trade conflict initiated by the United States remains the biggest headwind facing the Canadian economy," said Governor Tiff Macklem. "The recent further increases in U.S. tariffs on steel and aluminum underline the unpredictability of U.S. trade policy."
Canadian economic growth in the first quarter came in at 2.2 percent, with the pull-forward of exports to the United States and inventory accumulation. However, the economy is expected to be considerably weaker in the second quarter, with the strength in exports and inventories reversing and final domestic demand remaining subdued, said the bank.
The labor market has weakened, particularly in trade-intensive sectors, and unemployment has risen to 6.9 percent, it added. ■