The Bank of Canada’s decision to hold its interest rate at 2.75 per cent on Wednesday was based in part on improved business sentiment in its latest surveys and special consultations with trade-impacted companies.

“Overall, firms believed that their worst-case tariff scenarios were much less likely to materialize than they reported earlier this year,” said Bank of Canada deputy governor Sharon Kozicki, during a speech in front of the C.D. Howe Institute on Thursday. “While uncertainty remains high, there was less talk of catastrophic outcomes.”

Kozicki added that businesses were starting to see trade impacts on their performance and were anticipating raising their prices in response to increasing costs.

The tariff war has prompted the Bank of Canada to rely more on non-traditional

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