As was widely expected, both the Bank of Canada and U.S. Federal Reserve elected to hold interest rates at current levels following separate July policy meetings.
In Washington, D.C., the Fed voted 9-2 to keep its trendsetting federal funds rate in its current range of 4.25% to 4.50%.
The decision was met with dissent from Federal Reserve Governors Michelle Bowman and Christopher Waller, both of whom have advocated for the Fed to start cutting rates.
It was the first time since 1993 that more than one central bank governor voted against the consensus on a rate decision.
The decision to hold interest rates at current levels in the U.S. also defies President Donald Trump, who has been pushing the Fed to lower interest rates and stimulate the economy.
President Trump has also been a vocal critic of Federal Reserve Chair Jerome Powell and threatened to fire him before his current term ends in May 2026.
During a news conference, Chair Powell said that the U.S. central bank hasn’t decided yet about what to do on interest rates at its next meeting scheduled for Sept. 17.
In Ottawa, the Bank of Canada held its key interest rate steady at 2.75% as the threat of U.S. tariffs and trade uncertainty hang over the domestic economy.
Canada’s central bank has kept its trendsetting overnight interest rate at the same level since March of this year.
In a written statement, the Bank of Canada said it is contending with a lack of clarity around potential U.S. tariffs and the outcome of Canada-U.S. trade talks.
“With uncertainty about U.S. trade policy still high, the outlook for the Canadian economy remains clouded,” wrote the Bank of Canada.
Canada’s federal government is racing to secure a trade deal with the U.S. ahead of an Aug. 1 deadline imposed by President Trump or face tariffs as high as 35%.
At 1.9%, inflation is currently just below the Bank of Canada’s 2% annualized target.
Canada’s central bank is also scheduled to announce its next decision on interest rates on Sept. 17 of this year.
