Bank of Canada says it considered a rate pause, but tariff concerns prompted the cut

The Bank of Canada’s governing council suggested it considered holding interest rates steady earlier this month, but tariff concerns spurred another cut.

March 12 saw the bank lower interest rates to 2.75 per cent – the seventh consecutive cut since 2024.

The rate cut was announced just over a week after U.S. President Donald Trump levied the first round of tariffs on Canada.

The central bank’s summary of deliberations revealed Canada had a very strong start to 2025, but top decision-makers were concerned about the Canada-U.S. trade war having a disruptive effect on the Canadian economy.

Governing council members agreed that the trade war had “shifted the balance,” and ultimately decided this was enough reason to lower the key rate by 25 basis points.

However, the bank noted that if it weren’t for the tariffs, their decision likely would have been to hold rates at 3 per cent.

READ MORE: Bank of Canada announces interest rate cut to 2.75 per cent amid trade war concerns