BoC delivered a widely expected 25bps rate cut, bringing the overnight rate down to 2.75%. In its statement, BoC highlighted that the rapidly evolving trade policies are injecting “more-than-usual uncertainty” into economic outlook.
The central bank acknowledged that escalating trade tensions and newly imposed US tariffs could dampen economic growth while simultaneously increasing inflationary pressures. It emphasized that monetary policy “cannot offset the impacts of a trade war”.
Nonetheless, BoC noted that it is committed to preventing higher prices from driving ongoing inflation. Governing Council members will carefully monitor the downward pressures on inflation stemming from a weaker economy with the upward pressures resulting from higher costs tied to tariffs and other trade barriers.
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