Bank of Canada Policy Announcement (Jun. 2025)

The Bank of Canada avoided surprising markets by keeping interest rates unchanged at 2.75% today, as it continues to wait to see what the full impact of uncertain US trade policy on the economy will be. The accompanying statement did express some concern about the economic outlook, but on the whole the commentary was not as gloomy as it was in April. This poses a risk to our view that the Bank will cut rates three more times this year but, with the economy rapidly losing momentum and upside risks to inflation fading, we are sticking to that view. That would take the policy rate to 2.0%.