Canada-U.S. interest rate gap widens, but BoC more focused on tariffs: experts [Video]

Ryan Rocca / INsauga

The gap in interest rate policies between Canada and the U.S. widened further as the Bank of Canada cut its key lending rate by a quarter-point on Wednesday, while the U.S. Federal Reserve held its own rate.

Experts say despite the growing divergence, which puts downward pressure on the loonie, the Bank of Canada is more concerned with the impending threat of U.S. tariffs and what they could do to the economy.

The Bank of Canada’s overnight rate is now three per cent, after an aggressive succession of cuts beginning in June last year brought it down from a high of five per cent.

Later on Wednesday, the U.S. Federal Reserve held its key rate steady, as the economy south of the border has been more resilient in the face of higher rates.

The Fed cut its rate three times last year, bringing it to a range of 4.25 per …