The Bank of Canada cut overnight interest rates by 25 basis points to 2.75%, the lowest since July 2022.
It’s the seventh interest rate cut in the current BOC monetary easing cycle, as inflation remained near the bank’s 2% target.
Current inflation rates hover around 1.9%, and it comes amid uncertainty in the market and economic disruptions as US President Donald Trump imposes tariffs on steel and aluminum, which went into effect on Wednesday.
Trump repeatedly imposed 25% tariffs on Canada and Mexico and delayed them amid ongoing negotiations with both governments.
The Bank of Canada said that the economic outlook remains uncertain due to the fast changing political landscape, but cautioned that monetary policies couldn’t compensate for the impact of the trade war.
On Sunday, the governing Liberal party chose Mark Carney, the former governor of both Banks of Canada and England, as the new Prime Minister, and he vowed to “build a strong economy in the G7 group”.
Carney is expected to call for early elections, likely in April or May.
