Bank of Canada Prepares for Anticipated Rate Cut Amid Trade Tensions
The Bank of Canada is expected to reduce its policy rate to 2.25% on Wednesday amidst escalating trade tensions with the U.S., particularly following President Trump's tariff threats. Economists anticipate this move to stimulate demand, given the sluggish economic growth and stubborn unemployment rates.
The Bank of Canada is poised to slash its key policy rate to 2.25% this Wednesday. Heightened trade tensions, fueled by President Donald Trump's latest tariff threats, underscore the anticipated move to boost demand and economic growth.
Money markets have priced in a more than 90% probability of a 25 basis point rate cut, up from the 80% likelihood last week. This change comes after Trump halted trade dialogues and announced potential new tariffs on Canada, reacting to an Ontario anti-tariff advertisement aired during the MLB World Series opener.
Details of the proposed tariffs remain vague. Observers note that prior to this, economic data already suggested the need for rate cuts to address high unemployment and limited business investment. The Bank of Canada's rate decision will coincide with the U.S. Federal Reserve's own anticipated 25 basis point cut this week.
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