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Central Banks Brace for Prolonged Pause Amid Global Trade Tensions
Uncertainty in global trade continues to cast a long shadow over North American monetary policy, and both the Bank of Canada (BoC) and the U.S. Federal Reserve appear poised to keep interest rates unchanged in the near term. With economic signals sending mixed messages, policymakers on both sides of the border are opting for caution rather than risk destabilizing fragile growth.
For the BoC, sluggish exports and softer business investment have tempered earlier optimism about a stronger second half of the year. While consumer spending remains resilient, officials remain wary of tightening financial conditions too quickly, especially as Canadian households continue to carry historically high debt loads.
South of the border, the Federal Reserve faces a similar dilemma. Despite a robust labor market, persistent geopolitical tensions and uneven manufacturing data have reinforced the case for holding rates steady. Fed officials have repeatedly emphasized the need for “patience” as they monitor how trade dynamics ripple through supply chains and corporate sentiment.
Both central banks are effectively in wait‑and‑see mode, hoping that clarity on trade policy will provide the confidence needed to reassess their next moves. Until then, stability—not stimulus—appears to be the guiding principle.
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