The Bank of Canada cut its overnight target rate by 25 basis points to 2.75% on 12 March 2025, marking the seventh consecutive reduction since the easing cycle began in June 2024.
In its press release, the Bank cited uncertainty surrounding US tariff policy as the principal risk factor shaping its deliberations. Canadian exporters and manufacturers face higher costs from US tariffs already imposed and from further threatened duties, a scenario the Bank said could weigh materially on domestic growth and employment in the months ahead.
SEVEN CUTS IN NINE MONTHS
The cuts have been delivered as inflation returned close to the 2% target. Policymakers have framed each step as data-dependent, stressing that the pace of future adjustments would remain contingent on incoming economic indicators and the evolution of external risks, including the tariff situation.
TARIFF RISK
The Bank's statement noted that tariffs imposed by the United States and 'continuously changing US tariff threats' represented a source of uncertainty that complicated any forward-looking assessment of inflation and growth.
The Bank's statement stopped short of pre-committing to further cuts. The next rate announcement is scheduled for 16 April 2025. The overnight rate at 2.75% is the lowest it has been since September 2022.
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