- March 12, 2025
- Posted by: Melanie Scott
- Category: Market News
The Bank of Canada announced its 7th consecutive rate cut this morning, bringing its overnight rate down to 2.75% from 3.00%. The bank is concerned with the ongoing crisis of President Trump’s tariff threats and the potential damage they would have on the economy. Following Ontario’s Premier Doug Ford’s implementation of 25% tariff on electricity, President Trump announced yesterday morning that he would add an additional 25% tariff, total 50%, on all Canadian steel and aluminum coming into the US. While the CAD started the day off recouping some of its losses, this announcement caused the Loonie to drop off sharply and hit a one-week low. Later in the day Trump revoked the threat and returned the tariff to its original 25%.
BoC stated today that it would proceed carefully with further changes to its rate and assess both the upward pressures on inflation from high costs and downward pressures from a weaker economy. The bank has aggressively reduced its rate a total of 225 basis points over the last nine months.
US inflation cooled last month, though the impending trade war leaves the threat of rising prices lingering. February marked the first month of slowed inflation in the US since September. The consumer price index increased 2.8% year over year, down from 3.0% the previous month. Core prices rose 3.1% year over year, down from 3.3% in January. These declines were larger than projections but have a ways to go to meet the Fed’s 2.0% target. On a monthly basis core inflation also came down, reporting 0.2% in February compared to 0.4% in January.
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