Canada’s central bank has slashed its benchmark interest rate by 25 basis points to 3% in response to escalating economic uncertainty caused by potential US trade tariffs. The Bank of Canada cited “more-than-usual uncertainty” due to the rapidly evolving policy landscape and the looming threat of tariffs from the new US administration.
The central bank also downgraded its growth outlook for 2025 and 2026. “In the absence of new tariffs, growth is forecast to strengthen, and inflation remains close to 2 percent. But the threat of new tariffs is causing major uncertainty,” the bank noted in its outlook report.
Despite a recent meeting with U.S. officials described as “positive,” Canadian Foreign Minister Mélanie Joly stated that it remains unclear whether the proposed tariffs will be implemented this weekend. “Canada is ready to retaliate if necessary,” Joly told the press during a briefing streamed on Global News.
Last week, U.S. President Donald Trump indicated plans to impose a 25% tariff on all Canadian imports starting February 1. However, the White House has yet to release an official statement confirming these tariff rates.
