The economic impact of US President Donald Trump’s definitions will be in focus, as Canada is scheduled to announce the interest rate overnight on Wednesday.
Some analysts expect the central bank to reduce its standard price by 25 basis points, which reduces 2.5 percent. Others expect the bank to keep the fixed rate.
The reduction will make it the eighth consecutive, which was reduced by the Bank of Canada.
Royal Bank of Canada expects a 25 -point night rate reduction.
“Our expectations for the Canadian economy have weakened this year since March. It is still expected that the customs tariffs are expected to hurt Canadian exporters, but concerns have also grown about a more soft look from the United States because of the mutual tariffs and how this can be leaked to influence Canada,” said RBC economist in a note on Tuesday.
In general, inflation for Canadians in March, but the end of the GST/HST holidays and Trump’s commercial war is still stressing consumers in Canada. Canada statistics said on Tuesday that the annual inflation pace cools to 2.3 percent in March, compared to 2.6 percent in the previous month.
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“The mitigation of price pressures is consistent with Canada Bank reduces interest rates by 25 bits per second in tomorrow’s meeting, with the negative risks of growth from the trade war that exceeds any bullish trend to inflation from the customs tariff in our opinion,” said Catherine Jadz Economic at CIBC.
However, other economists indicate that the bank can retain the rate at 2.75 percent.
“If commercial tensions continue to escalate, we are looking at the risk of a stagnation environment with a slower growth and high prices. With a lot of uncertainty about global growth – especially with the definitions made by the United States – we expect the bank to keep fixed rates at tomorrow’s meeting,” said Andrew Decoa, the main economist in a multi -power room.
The governor of the Canadian Bank Tif McLim said last month that although the Canadian economy entered 2025 on a “solid foot”, with inflation remaining close to the target rate of the bank, which is adult since last summer, Trump’s tariff is a new challenge.
“In recent months, the wide uncertainty caused by the constantly changing customs tariff threats has been shaken by business and consumer. This restricts the intentions of home spending and companies plans to employ and invest.”
Maclim added that the trade conflict with the United States is likely to increase inflation in the coming months.
He said: “The companies have reduced their sales expectations, especially in manufacturing and sectors that depend on appreciation spending by families.”
“Credit has become more difficult to reach some companies, and with the weakness of the weakest Canadian dollar, the cost of imported machines and equipment has increased. As a result of all these factors related to trade, many companies have reduced employment and investment plans.”
When asked if Canada stare in the recession, McLim said: “It will depend a lot on what the United States is doing with their commercial policy.”
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