Overview
- The Bank of Canada lowered its overnight rate by 0.25 percentage point to 2.25%, marking a second straight cut and the lowest level since July 2022.
- Governor Tiff Macklem said high U.S. tariffs and trade uncertainty have weakened Canada’s economy, with tariff-driven price pressures offset by soft demand.
- The Bank of Japan kept its policy rate around 0.5% for a sixth consecutive meeting, while two of nine policy board members dissented in favor of a hike to about 0.75%.
- Governor Kazuo Ueda warned that more tariff costs will be passed to consumers, creating greater downside risk for consumption and overall economic activity.
- The BOJ left its fiscal 2025 core CPI forecast at 2.7% and is watching wage-setting and corporate earnings, as some market participants speculate on possible political influence that Ueda addressed by stressing continued government communication.