Bank of Canada Cuts Interest Rate to 2.75%, Citing heightened trade tensions and tariffs imposed by the United States

According to the official Bank of Canada press release, “Bank of Canada reduces policy rate by 25 basis points to 2¾%,” the bank stated:

• “The Bank of Canada today reduced its target for the overnight rate to 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.”
• “However, heightened trade tensions and tariffs imposed by the United States will likely slow the pace of economic activity and increase inflationary pressures in Canada.”
• “The economic outlook continues to be subject to more-than-usual uncertainty because of the rapidly evolving policy landscape.”

The press release also highlighted that while the Canadian economy demonstrated resilience in early 2025, with inflation remaining close to the 2% target, the intensification of the trade conflict is posing significant risks.

Governor Tiff Macklem, during the associated press conference, emphasized that “monetary policy cannot offset the impacts of a trade war. What it can and must do is ensure that higher prices do not lead to ongoing inflation.” This statement underscores the bank’s focus on maintaining price stability amidst the external economic pressures.

The key points from the press release and the governor’s statement.

• “Monetary policy cannot offset the impacts of a trade war,” the Bank of Canada said in a statement alongside the decision.
• The Council will also be closely monitoring inflation expectations. The Bank is committed to maintaining price stability for Canadians.

The Bank of Canada has stated that they will continue to monitor the economic landscape and adjust monetary policy as needed. The next scheduled date for announcing the overnight rate target is April 16, 2025.

To ensure the most up-to-date and accurate information, please refer to the official Bank of Canada website.

Bank of Canada reduces policy rate by 25 basis points to 2¾%https://t.co/ZnFzJbHkJV#economy #cdnecon

— Bank of Canada (@bankofcanada) March 12, 2025