Bank of Canada Announcement – March 2025

The Bank of Canada has lowered its overnight rate to 2.75% amid rising U.S. trade tensions and economic uncertainty. While Canada ended 2024 with solid GDP growth (2.6%) and inflation near the 2% target, the outlook has dimmed due to tariffs and weakened business and consumer confidence. Early 2025 is expected to see slower growth and job creation, despite recent momentum in housing and consumption driven by earlier rate cuts. Inflation is projected to rise to 2.5% in March as temporary tax breaks expire and tariff-related costs increase. Though core inflation remains above 2%, wage growth is moderating. The Bank acknowledges that monetary policy cannot resolve trade disruptions but aims to ensure inflation remains stable. The rate cut reflects a cautious approach to supporting the economy without letting inflation spiral, as Governing Council continues to monitor inflation expectations, global volatility, and domestic economic signals.

The next scheduled date for announcing the overnight rate target is April 16, 2025