The Bank of Canada is expected to announce its latest interest rate decision on Wednesday morning as uncertainty around U.S. President Donald Trump’s tariffs clouds the Canadian economic forecast.
Economists’ predictions are split on whether the bank will keep the rate at 2.75 per cent or cut it by 0.25 percentage points, to 2.5 per cent.
“Canadian central bankers face a difficult decision this week,” wrote Desjardins economists Royce Mendes and Tiago Figueiredo in a note to clients on Tuesday. “While tariffs and market volatility will slow the economy, policymakers are concerned that the global trade war could unleash another wave of inflation.”
Mendes and Figueiredo are expecting the bank will not cut on Wednesday.
“In a financial crisis or pandemic, time is of the essence. However, in a trade war, things are slower moving. Officials have the luxury of not being forced into a decision they may later regret.”
The bank has lowered its key rate by 225 basis points from a five per cent peak since June, more than any other G7 central bank.
The announcement is expected at 9:45 a.m. followed by a news conference with Bank of Canada governor Tiff Macklem and senior deputy governor Carolyn Rogers.
This is a developing story.
