Canada Chart Pack (Apr. 2025)

While Canada escaped “liberation day” relatively unscathed, the imposition of US tariffs and risk of more to come will still weigh on exports, consumer confidence and investment. With immigration also plunging, we now expect GDP to expand by just 0.4% annualised on average over the next four quarters. Retaliatory tariffs and a weaker loonie will push core inflation toward 3.5% but the scrapping of the carbon tax will offset much of the pressure on the headline rate. We expect the Bank of Canada to prioritise the weaker economic outlook by cutting its policy rate by a further 75bp to 2.0%.