Bank of Canada Cuts Rate to 2.75% Amid US Tariff Concerns

On March 12, the Bank of Canada (BoC) lowered its key interest rate by 25 basis points to 2.75%, marking the seventh consecutive cut amid escalating trade tensions with the U.S. Governor Tiff Macklem cited concerns that U.S. tariffs are impacting business confidence, investment, and could lead to higher inflation, which the bank projects may rise to 2.5% in March. The ongoing tariff situation is expected to slow economic growth and increase prices, complicating monetary policy decisions. Despite recent GDP growth of 2.6%, heightened uncertainty from U.S. trade policies is restraining consumer spending and business investment plans. Analysts predict further rate cuts may be necessary, but caution that monetary policy alone cannot fully mitigate the effects of the trade conflict. The BoC's next rate decision is anticipated on April 16, with markets divided on future cuts.