What changed in the Bank of Canada statement —
Bank of Canada held policy at 2.75%. The Bank of Canada held rates steady after a prior cut, with a more cautious tone on the labour market and a sharper downside risk scenario. The overall signals suggest a wait-and-see posture, with no bias toward further easing or tightening, but the heightened risk framing keeps the next move tilted toward a cut if conditions deteriorate.
Decision
- Decision: hold
- Overnight rate: 2.75%
Going into the decision
On the day, the committee read as hawkish — 0.5 on a scale where +3 means every member wants higher rates and −3 means every member wants cuts.
Reconstructed from official member remarks published before the decision date. 5 of 7 active members had stored official remarks.
What changed
The Bank of Canada held rates steady after a prior cut, with a more cautious tone on the labour market and a sharper downside risk scenario. The overall signals suggest a wait-and-see posture, with no bias toward further easing or tightening, but the heightened risk framing keeps the next move tilted toward a cut if conditions deteriorate.
- Inflation — More dovish. The prior document projected inflation to rise above target near term, while the current document does not include a standalone inflation forecast, implying reduced near-term inflation concern.
- Labour Market — More dovish. Prior warned of potential labour market disruption, while current reports actual employment decline, reinforcing dovish labour market signals.
Previous wording
The Bank of Canada today reduced its target for the overnight rate to 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.
However, heightened trade tensions and tariffs imposed by the United States will likely slow the pace of economic activity and increase inflationary pressures in Canada.
In February, job growth stalled.
Inflation is expected to increase to about 2½% in March with the end of the tax break.
While economic growth has come in stronger than expected, the pervasive uncertainty created by continuously changing US tariff threats is restraining consumers’ spending intentions and businesses’ plans to hire and invest. Against this background, and with inflation close to the 2% target, Governing Council decided to reduce the policy rate by a further 25 basis points.
Monetary policy cannot offset the impacts of a trade war. What it can and must do is ensure that higher prices do not lead to ongoing inflation.
Governing Council will be carefully assessing the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs.
Current wording
The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.
The major shift in direction of US trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations.
Employment declined in March and businesses are reporting plans to slow their hiring.
In the second scenario, a protracted trade war causes Canada’s economy to fall into recession this year and inflation rises temporarily above 3% next year.
Governing Council will proceed carefully, with particular attention to the risks and uncertainties facing the Canadian economy.
Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war. What it can and must do is maintain price stability for Canadians.
Official statement
Bank of Canada holds policy rate at 2¾%
The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.
The major shift in direction of US trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations. Pervasive uncertainty makes it unusually challenging to project GDP growth and inflation in Canada and globally. Instead, the April Monetary Policy Report (MPR) presents two scenarios that explore different paths for US trade policy. In the first scenario, uncertainty is high but tariffs are limited in scope. Canadian growth weakens temporarily and inflation remains around the 2% target. In the second scenario, a protracted trade war causes Canada’s economy to fall into recession this year and inflation rises temporarily above 3% next year. Many other trade policy scenarios are possible. There is also an unusual degree of uncertainty about the economic outcomes within any scenario, since the magnitude and speed of the shift in US trade policy are unprecedented.
Global economic growth was solid in late 2024 and inflation has been easing towards central bank targets. However, tariffs and uncertainty have weakened the outlook. In the United States, the economy is showing signs of slowing amid rising policy uncertainty and rapidly deteriorating sentiment, while inflation expectations have risen. In the euro area, growth has been modest in early 2025, with continued weakness in the manufacturing sector. China’s economy was strong at the end of 2024 but more recent data shows it slowing modestly.
Financial markets have been roiled by serial tariff announcements, postponements and continued threats of escalation. This extreme market volatility is adding to uncertainty. Oil prices have declined substantially since January, mainly reflecting weaker prospects for global growth. Canada’s exchange rate has recently appreciated as a result of broad US dollar weakness.
In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence. Consumption, residential investment and business spending all look to have weakened in the first quarter. Trade tensions are also disrupting recovery in the labour market. Employment declined in March and businesses are reporting plans to slow their hiring. Wage growth continues to show signs of moderation.
Inflation was 2.3% in March, lower than in February but still higher than 1.8% at the time of the January MPR. The higher inflation in the last couple of months reflects some rebound in goods price inflation and the end of the temporary suspension of the GST/HST. Starting in April, CPI inflation will be pulled down for one year by the removal of the consumer carbon tax. Lower global oil prices will also dampen inflation in the near term. However, we expect tariffs and supply chain disruptions to push up some prices. How much upward pressure this puts on inflation will depend on the evolution of tariffs and how quickly businesses pass on higher costs to consumers. Short-term inflation expectations have moved up, as businesses and consumers anticipate higher costs from trade conflict and supply disruptions. Longer term inflation expectations are little changed.
Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs. Our focus will be on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. This means we will support economic growth while ensuring that inflation remains well controlled.
Governing Council will proceed carefully, with particular attention to the risks and uncertainties facing the Canadian economy. These include: the extent to which higher tariffs reduce demand for Canadian exports; how much this spills over into business investment, employment and household spending; how much and how quickly cost increases are passed on to consumer prices; and how inflation expectations evolve.
Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war. What it can and must do is maintain price stability for Canadians.
Information note
The next scheduled date for announcing the overnight rate target is June 4, 2025. The Bank will publish its next MPR on July 30, 2025.
Monetary Policy Report—April 2025
The Canadian economy ended 2024 in a strong position. However, the trade conflict and tariffs are expected to slow growth and add to price pressures. The outlook is very uncertain because of the unpredictability of US trade policy and the magnitude of its impact on the Canadian economy.
Press Conference: Monetary Policy Report – April 2025
Release of the Monetary Policy Report – Press conference by Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers (10:30 (ET) approx.).
Monetary Policy Report Press Conference Opening Statement
Governor Tiff Macklem discusses the Monetary Policy Report and the key issues involved in the Governing Council’s deliberations about the monetary policy decision.
Summary of Governing Council deliberations: Fixed announcement date of April 16, 2025
This is an account of the deliberations of the Bank of Canada’s Governing Council leading to the monetary policy decision on April 16, 2025.
Related
Full meeting record · Press conference transcript · Previous statement · Next statement
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