The Canadian Bank’s governor warned that tariff war with the United States would “hurt” Canada’s economic activity.
The Canadian Bank (BOC) warns that the main policy rate is reduced to 3 % in 25 Basis points, reducing growth forecasts, causing a significant economic damage caused by the United States.
“The long -term trade dispute in Canada will severely hurt Canada’s economic activity,” said Governor Tiff Mac Rem at a press conference on Wednesday. Such prospects have clouded economic prospects.
US President Donald Trump promises 25 % of the imports of all imports from Canada on Saturday. Canada sends 75 % of the exports of all products and services to the United States.
If Canada and other countries have flattened in retaliation of 25 % of tariffs in the United States, it is possible that the growth of Canada will reduce 2.5 % points in the first year and reduce 1.5 % in the second year. The bank states that there is. A hypothetical scenario.
The reduction on Wednesday has marked six consecutive banks that the bank reduced the borrowing cost. Inflation has consistently remained at the middle point of 1 to 3 % of banks, but economic growth is still slow.
“The inflation rate is about 2 %, with an excessive supply of the economy, and the policy council has decided to reduce the policy rate to 3 % to 25 Basis points,” said the bank.
The Canadian dollar decreased by 1.44 to 0.44 to US dollars after the decision.
Severe situation
The Money Market has a more than 43 % of the 25 -base cutcut on the BOC’s next currency policy decision on March 12.
“The Canadian Bank is in a difficult situation, but our opinion is that they would be more aggressive in terms of interest reduction. [US tariffs] Doug Porter, Chief Economist of BMO Capital Markets, states:
Bank’s challenge is that both US tariffs can driven inflation (theoretically, high rate needs, and more stimuli in the form of lower rates on paper. There may be a possibility.
“Policy interest rates -A single tools will not be able to lean on weaker outputs and higher inflation,” said McRem. However, the bank said that it could help coordinating the economy, especially in the low inflation rate.
Banks have also announced that a quantitative tightening program designed to discharge excessive fluidity pumped into the economy during pandemics will end in March.
BOC is one of the most aggressive reductions of the top central banks, raising the estimated economic growth in October to 1.8 % from 2.1 % in October. The economy has increased 1.8 % in 2026 and decreases from the previous 2.3 % forecast growth.
Central Bank raised inflation predictions from 2.2 % in 2025 to 2.3 % and 2.1 % in 2026. The prediction does not take into account the possibility of US tariffs.
The Canadian economy has been reduced per capita for the sixth consecutive quarter, and most of the observed growth is supported by an increase in population.
A new curb of the federal government’s immigration can reduce the population by 0.2 % in both 2025 and 2026.
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