MNI BoC Review-March 2025: Trade War Tradeoffs

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.