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MNI BoC Review-March 2025: Trade War Tradeoffs

Consensus is for two more rate cuts, but that's contingent on developments in the US-Canada trade war.
Central Bank ReviewCanadaBoC - ReviewCentral Bank ReportsMarketsStoryNorth America

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EXECUTIVE SUMMARY: 

  • The Bank of Canada (BoC) cut at the seventh consecutive meeting in March, by 25bp to an overnight rate target of 2.75%, in line with analyst consensus and market pricing.
  • The 225bp of easing since June brings rates to what Governor Macklem characterized as the middle of the “neutral” range, putting policy in a finely poised position with the escalating trade war between Canada and the U.S. looming large over the economic outlook.
  • Overall the press conference leaned marginally hawkish, as Macklem was if anything more emphatic on the need to keep inflation / inflation expectations under control.
  • There was no post-meeting change in analyst expectations for the rate path ahead, with overwhelming consensus for a terminal rate of 2.25% (two more 25bp cuts), in line with market pricing. But those views are very much contingent on trade developments – and much could change between now and the Apr 16 decision.
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Download Full Report Here 


EXECUTIVE SUMMARY: 

  • The Bank of Canada (BoC) cut at the seventh consecutive meeting in March, by 25bp to an overnight rate target of 2.75%, in line with analyst consensus and market pricing.
  • The 225bp of easing since June brings rates to what Governor Macklem characterized as the middle of the “neutral” range, putting policy in a finely poised position with the escalating trade war between Canada and the U.S. looming large over the economic outlook.
  • Overall the press conference leaned marginally hawkish, as Macklem was if anything more emphatic on the need to keep inflation / inflation expectations under control.
  • There was no post-meeting change in analyst expectations for the rate path ahead, with overwhelming consensus for a terminal rate of 2.25% (two more 25bp cuts), in line with market pricing. But those views are very much contingent on trade developments – and much could change between now and the Apr 16 decision.