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3w ago

Bank of Canada Pauses Rate Cuts at 2.75% Amid Trade Uncertainty

The central bank halts its easing cycle, citing the unpredictable impact of U.S. tariffs and presenting two economic scenarios in its latest Monetary Policy Report.

Bank of Canada Governor Tiff Macklem takes part in a press conference, after cutting key interest rate, in Ottawa, Ontario, Canada March 12, 2025. REUTERS/Blair Gable/File Photo
A view shows a Bank of Canada building in Ottawa, Ontario, Canada December 11, 2024. REUTERS/Blair Gable/File Photo
Governor of the Bank of Canada Tiff Macklem walks outside the Bank of Canada building in Ottawa, Ontario, Canada June 22, 2020. 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

Overview

  • The Bank of Canada held its policy rate at 2.75% on April 16, 2025, following seven consecutive rate cuts since mid-2024.
  • Governor Tiff Macklem emphasized the uncertainty caused by U.S. trade tariffs, which have disrupted economic forecasts and shaken business and consumer confidence.
  • The Monetary Policy Report outlined two scenarios: one with limited tariff impacts and stable inflation, and another with a prolonged trade war leading to recession and inflation above 3%.
  • Economic indicators show slowing business investment, weaker household spending, and declining employment, with second-quarter GDP growth expected to drop significantly.
  • Market analysts remain divided on whether this pause signals a longer-term hold or precedes further rate cuts as the trade situation evolves.