Canada Faces Rising Recession Risks as Economists Predict Further Rate Cuts

The Bank of Canada is expected to hold rates steady this week but may lower them twice more in 2025 due to U.S. trade tensions and weakening economic forecasts.

• Economists forecast at least two more Bank of Canada rate cuts this year, despite an expected pause at 2.75% during the upcoming policy meeting.
• Growth projections for Canada have been revised downward to 1.2% in 2025 and 1.1% in 2026, reflecting the impact of U.S. tariffs and trade policy uncertainty.
• A Reuters poll shows a majority of economists view the risk of a Canadian recession in 2025 as high, citing a weakening labor market and declining business sentiment.
• Over 60% of surveyed economists describe the impact of U.S. tariffs on Canadian business sentiment as 'very negative,' with key sectors like autos and steel affected.
• The Bank of Canada has already implemented seven consecutive rate cuts since June 2024, totaling 225 basis points, as it seeks to counteract economic headwinds.

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