Bank of Canada Reduces Interest Rate to 2.75%

In a move that underscores the growing concerns over global trade tensions, the Bank of Canada (BoC) has announced a reduction in its interest rate by 25 basis points, bringing it down to 2.75%. This decision, revealed on Wednesday, reflects the central bank's response to the evolving economic landscape.

The BoC highlighted that while the Canadian economy started 2025 on a strong note, with inflation nearing the 2% target and robust GDP growth, the imposition of tariffs by the United States and escalating trade tensions are likely to dampen economic activity and increase inflationary pressures. "The economic outlook is fraught with more-than-usual uncertainty due to the rapidly changing policy environment," the BoC stated.

Furthermore, the central bank anticipates that the ongoing trade disputes with the U.S. will result in a slowdown in economic growth during the first quarter of the year.