Bank of Canada Cuts Interest Rates to Navigate Through Trade Uncertainties

In a significant move to counteract the economic slowdown induced by escalating 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 was unveiled in the central bank's latest monetary policy update on Wednesday.

"The Canadian economy showed strong signs of health at the beginning of 2025, with inflation nearing the 2% target and robust GDP growth. Nonetheless, the increasing trade tensions and tariffs imposed by the United States are expected to decelerate economic activities and amplify inflationary pressures in Canada. The economic forecast remains shrouded in uncertainty due to the rapidly changing policy environment," stated the BoC.

The central bank further highlighted that the ongoing trade disputes with the US are likely to dampen economic growth in the first quarter of this year, signaling cautious optimism for the future.