The Bank of Canada on Wednesday trimmed its key policy rate by 25 basis points to 3%, cut growth forecasts and said it was concerned that U.S. tariffs could stoke persistently high inflation. U.S. President Donald Trump is promising to impose a 25% tariff on all imports from Canada on Saturday.

In December 2024, Governor Tiff Macklem pointed to a 2019 internal simulation of the U.S. imposing significant tariffs. That study examined the consequences of a 25 per cent tariff on all imports (rather than from specific countries), so there are some limitations to its relevance — but the modelled impacts are nonetheless gloomy.

The Bank of Canada announced today that it will cut its policy interest rate by another 25 basis points to three per cent.