The Bank of Canada (BoC) held its benchmark overnight interest rate steady at its April meeting. Canada’s central bank had reduced interest rates at seven straight meetings prior to this one. Aggressive rate cuts were needed to help boost consumer spending and business activity. Now, the BoC must consider the path of inflation and Canada’s economy amid tariffs from the US. Here are more details about the BoC’s rate decision yesterday.

• The BoC held its policy interest rate steady at 2.75%. A Bloomberg survey showed economists were expecting the BoC to hold steady at this meeting after seven consecutive rate cuts. At its previous meeting, the BoC noted that lower interest rates helped support economic conditions. However, US tariffs now threaten the health of Canada’s economy.
• Canada’s central bank said it will proceed carefully. It’s waiting to see how US trade policy evolves and what impact that has on Canada’s economy. The BoC is committed to ensuring Canadians have faith that it can keep inflation under control and support Canada’s economy.
• The central bank’s outlook has been split into two possible scenarios. If US tariffs on Canada are removed or limited, Canada’s economy could slow this quarter before moving higher, while inflation should slow to 2%.
• The other scenario might result in a recession in Canada. A prolonged trade battle between the US and Canada, along with other countries, would negatively impact economic conditions in Canada and push prices higher.

The BoC’s first rate hold in eight meetings comes amid economic uncertainty as the US adjusts its trade policy. A prolonged trade battle could significantly impact Canada’s economy. The BoC noted it would carefully monitor further developments in trade and would respond according to their impact on Canada’s economy.

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