The Bank of Canada (BoC) released the Summary of Deliberations from its last meeting in January on Wednesday. The BoC noted that mounting uncertainty is making economic conditions in Canada and globally more unpredictable, leaving the central bank unable to properly assign risks to its outlook. This makes it difficult to predict potential changes to its policy interest rate. The BoC cited many policy changes that were causing the global economic unrest, primarily out of the US.

• The BoC held its benchmark overnight interest rate steady at 2.25% at its January meeting. The BoC’s believed it was at an appropriate level to help support the Canadian economy while keeping inflationary pressures in check.
• Canada’s central bank said it would be willing to adjust its policy interest rate up or down depending on the direction of the Canadian economy, which was facing uncertainty given new tariff threats and the unpredictability of US policy.
• The meeting minutes showed the BoC was concerned about being able to properly assess risks given changes in US policy, including ongoing tariff threats, Greenland, Venezuela and questions about the US Federal Reserve Board’s independence.
• Earlier this week, Canada-US trade came to the forefront after US President Donald Trump threatened to stop the opening of the Gordie Howe International Bridge and reports showing he is considering exiting the Canada-United States-Mexico Agreement.
• On Wednesday, the US House of Representatives voted against President Trump’s use of emergency powers to put tariffs on Canada. However, those tariffs are unlikely to be halted as they still require U.S. Senate and President Trump’s approval.

The BoC will make its next interest rate announcement on March 18. At this point, another rate cut appears unlikely. However, Canadian economic conditions could shift quickly as geopolitical and trade uncertainty heighten. The BoC will have to navigate carefully amid all the uncertainty it cited in its Summary of Deliberations.

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