Bank of Canada to ease monetary policy ahead of Trump's new tariffs

During the meeting on March 12, Bank of Canada officials engaged in extensive discussions on whether to keep interest rates on hold. Ultimately, the regulator decided to cut borrowing costs to 2.75% in order to ease concerns for consumers and businesses affected by Donald Trump's trade policies. This view is based on insights provided by Bloomberg experts.

Earlier this month, the Bank's Governing Council was split in two, with some members advocating for a wait-and-see approach to gather more data on GDP and inflation before lowering rates. Others argued that the US President's tariff threats had weakened Canada's economic outlook enough to warrant additional monetary easing, the agency reported.

Committee officials also expressed differing views on the actual impact of Trump's trade duties, particularly with respect to their macroeconomic implications. The regulator contends that the administration has yet to see widespread effects from these tariffs; however, they recognize such repercussions could materialize in the medium term.