Bank of Canada Reduced Policy Rate by 25 basis points bringing it down to 2.75%

The Bank of Canada has announced a 25 basis point cut to its overnight lending rate, bringing it to 2.75 percent. This decision, made on Wednesday, comes as the ongoing trade war with the U.S. begins to place increasing pressure on the Canadian economy. Bank of Canada governor Tiff Macklem explained that the economy had started the year strong, with solid GDP growth and inflation remaining within the central bank's target of two percent.

However, Macklem pointed out that the uncertainty surrounding tariffs, due to the fluctuating trade relationship between Canada and the U.S., has negatively impacted business spending, hiring, and consumer confidence. In response to this economic backdrop, the central bank opted for the rate cut. While it is still early to see the full impact of new tariffs, surveys suggest that the threat of additional tariffs and the ongoing uncertainty about the trade relationship are already significantly affecting both business and consumer intentions.