Canada’s economy showed signs of growth in the second quarter of 2026, but uncertainty from U.S. trade policies and the war in Iran means monetary policy must remain nimble, the Bank of Canada’s governing council said during deliberations preceding its July 15 interest rate decision. A summary of deliberations that led to the council’s decision to hold interest rates steady at 2.25 per cent shows that members discussed Canada’s sluggish economy. Gross domestic product had not grown between the first quarter of 2025 and the first quarter of 2026, members said, and the heightened uncertainty around tariffs and the Canada–U.S.–Mexico (CUSMA) agreement had kept the economy in excess supply. However, members noted recent indicators that showed the economy was recovering in the second quarter of 2026 after it adjusted to the U.S. tariffs and geopolitical turbulence, and the growth was broadening instead of relying on strong consumer and government spending.