Tariff uncertainty hangs over Bank of Canadas 1st rate decision of 2025 – National [Video]

The Bank of Canada is being pulled in a few different directions ahead of its first interest rate decision of the year on Wednesday.

On one hand, there are signs of trouble bubbling up in underlying inflation that could make an argument for keeping borrowing costs higher for longer.

On the other: fears of a trade war with the United States. President Donald Trump has reiterated threats to impose tariffs of 25 per cent on Canadian goods that could be set to take effect mere days after the central bank’s rate decision.

“If Trump were to carry out those 25 per cent tariffs, and they were in place for some time, unfortunately a recession in Canada would be inevitable,” says Stephen Brown, deputy chief North America economist at Capital Economics.

A trade blow like that would normally push the Bank of Canada towards steeper rate cuts in a bid to salvage economic growth. But dropping rates …