Bank of Canada cuts key rate with trade war storm on horizon – National [Video]

The Bank of Canada warned after delivering another interest rate cut on Wednesday that Canada’s economy would be “tested” if the United States delivers on a threat to impose blanket tariffs on Canadian goods.

In a “severe” scenario mapped out by the central bank, those tariffs could simultaneously send the Canadian economy into a recession later this year and push inflation higher.

The Bank of Canada on Wednesday cut its benchmark interest rate by 25 basis points, bringing the policy rate down to 3.0 per cent.

The move — the central bank’s sixth cut in a row — was widely expected by markets and most economists.

BMO chief economist Doug Porter said in a note to clients on Wednesday that the quarter-point drop solidifies the Bank of Canada’s position as the “most aggressive cutter in the world.”

Wednesday’s statements contained little forward guidance from the central bank about where interest rates could be heading …