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Bank of Canada Expected to Hold Rates Today, Economists Remain Divided

The central bank faces a pivotal decision as U.S. tariffs weigh heavily on the Canadian economy, with analysts split between a rate cut and maintaining the current level.

A view shows a Bank of Canada building in Ottawa, Ontario, Canada December 11, 2024. REUTERS/Blair Gable/File Photo
A sign is pictured outside the Bank of Canada building in Ottawa, Ontario, Canada, May 23, 2017. REUTERS/Chris Wattie/File Photo
General view of the Bank of Canada building on Parliament Hill in Ottawa, Ontario, Canada September 17, 2020. REUTERS/Blair Gable/File Photo
The Bank of Canada building in Ottawa is shown on Wednesday, March 12, 2025. THE CANADIAN PRESS/Sean Kilpatrick

Overview

  • The Bank of Canada is set to announce its policy rate decision today, with markets closely watching whether it will hold steady at 2.75% or cut by 25 basis points to 2.5%.
  • This marks the first time in ten months of rate reductions that economists and analysts are nearly evenly split on the bank's decision.
  • U.S. President Donald Trump's escalating tariff policies have created significant uncertainty, impacting Canadian exporters, consumer confidence, and business investments.
  • Recent data shows inflation in Canada eased to 2.3% in March, which could support further rate cuts despite concerns about stagflation risks.
  • The Bank of Canada has already reduced its benchmark rate by 225 basis points since June 2024, an aggressive easing cycle unmatched among major global economies.