Bank of Canada cuts rates due to negative impact of US trade policy on country's economy

On Wednesday, the Bank of Canada cut its interest rate by 25 basis points to 2.75%. Representatives of the regulator expressed concern about increased inflationary pressures and slowing economic growth in the country, which were caused by the ambiguous trade policy of US President Donald Trump, according to Reuters.

As reported by the agency, the Canadian central bank is going to take a cautious approach to any further changes in monetary policy. The Bank of Canada's governor, Tiff Macklem, indicated that officials are now committed to ensuring price stability in the nation. However, he did not share any forecasts about the regulator's future strategies.

The tariffs imposed by the US administration on imports of Canadian steel and aluminum products have alarmed business representatives and shaken consumer confidence. Nevertheless, the Canadian authorities intend to impose retaliatory tariffs against the United States amounting to C$28.9 billion (over US$20 billion), Reuters noted.

According to officials from the Bank of Canada, trade tensions will disrupt the recovery of the country's labor market. In addition, the regulator anticipates that inflation will be about 2.5% in March, up to 1.9% in January.