On April 16, 2025, the Bank of Canada (BoC) announced its decision to maintain the overnight policy rate at 2.75%, marking a pause after seven consecutive rate cuts. This move reflects the central bank's cautious approach in the face of escalating trade tensions, particularly with the United States, which have introduced significant economic uncertainty.
Key Highlights:
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Interest Rates Unchanged: The BoC kept the overnight rate at 2.75%, the Bank Rate at 3.00%, and the deposit rate at 2.70%.
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Inflation Trends: Canada's inflation rate rose to 2.3% in March, influenced by higher goods prices and a weakened Canadian dollar. However, factors such as the removal of the consumer carbon tax and declining oil prices are expected to moderate inflation in the coming months.
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Economic Outlook: The BoC's April Monetary Policy Report outlines two scenarios: one where limited tariffs keep inflation near 2%, and another involving a broader trade conflict leading to a potential recession and inflation temporarily exceeding 3%.
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Global Factors: The global economic landscape has weakened due to trade disruptions. While inflation is easing globally, rising inflation expectations in the U.S. and increasing market volatility add to the uncertainty.
Implications for Canadians:
For homeowners and prospective buyers, the steady interest rate suggests that borrowing costs will remain stable in the short term. However, the economic uncertainty stemming from international trade policies may impact employment, investment, and overall economic growth.
The BoC emphasized its commitment to supporting economic growth and maintaining price stability, stating that future policy decisions will be guided by evolving economic indicators and global developments.
Source: https://www.bankofcanada.ca/2025/04/fad-press-release-2025-04-16/