The Bank of Canada reducing its interest rate to 2.75 per cent was what many expected, including Ventum Financial’s Commodities Futures Advisor Adam Pukalo.
It’s the seventh consecutive cut to the interest rate since June of 2024, as the Bank of Canada cited the inflation rate and the economy’s positive momentum into 2025 as part of the reasoning for their latest decision.
However, the Central Bank warned that could all change with the ongoing tariffs from the United States. The trade war between Canada and the U.S. has led to business and consumer confidence to be “shaken”, said Tiff Macklem, Governor of the Bank of Canada. Macklem added trade uncertainty was causing “harm” before the tariffs were imposed last week.
“As a result of all these trade-related factors many businesses have really scaled back their hiring and investment plans and things like that, so whenever you hear businesses scaling back, that’s kind of a bad omen potentially kind of going forward so I’m just kind of watching to see maybe what rates do,” said Pukalo.
Moving forward, Macklem says the Bank of Canada will “proceed carefully” as it observes the impact tariffs will have on inflation and growth in the economy.
When asked if he sees the interest rate moving below two per cent, Pukalo believes there may another cut or two this year, but doesn’t see it dropping below that mark.
The Bank of Canada’s next interest rate decision is April 16.