The Bank of Canada kept interest rates unchanged at 2.75% for a third consecutive meeting today as it awaits greater clarity over the country’s future trading terms with the US. The communications showed policymakers placing a greater emphasis on the downside risks to growth from tariffs than the upside risks to underlying inflation, noting that there were “reasons to think [it] will gradually unwind”. We are therefore happy with our non-consensus call that the Bank will cut rates twice more this year, down to a low of 2.25%.
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