In a move reflecting heightened economic uncertainty, the Bank of Canada reduced its benchmark interest rate by 25 basis points to 3% this Wednesday. This decision comes amid growing concerns over potential trade tariffs imposed by the new US administration.
The central bank's outlook report highlighted \"more-than-usual uncertainty\" in the evolving policy landscape, particularly pointing to the threat of US tariffs as a significant factor. In addition to the rate cut, the Bank of Canada also lowered its growth forecasts for 2025 and 2026.
\"In the absence of new tariffs, growth is forecast to strengthen, and inflation remains close to 2 percent. But the threat of new tariffs is causing major uncertainty,\" the central bank stated.
Despite a recent meeting with US Secretary of State Marco Rubio, which was described as \"positive,\" Canadian Foreign Minister Melanie Joly emphasized that it remains unclear whether the proposed tariffs will take effect this coming weekend. Speaking at a press briefing streamed on Global News, Joly affirmed that Canada is prepared to retaliate if necessary.
Last week, US President Donald Trump indicated plans to implement a 25% tariff on all Canadian imports starting February 1, as reported by CNN. However, the White House has yet to issue an official statement confirming these tariff rates.
Reference(s):
cgtn.com
