Toronto 
The Bank of Canada has left its key overnight interest rate unchanged at 2.75%. The Bank Rate stands at 3.00%, and the deposit rate is 2.70%.
When to Expect Interest Rate Hikes in Canada in 2024
This decision comes amid global economic turbulence driven by shifting U.S. trade policies and rising inflation expectations.
Here are highlights of Wednesday’s rate decision:
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Economic Uncertainty and Scenarios
The Bank’s April Monetary Policy Report outlines two possible outcomes. One assumes limited tariffs, keeping inflation near 2%. The other forecasts a prolonged trade war, pushing Canada into recession and inflation above 3% in 2026. The unpredictability of U.S. trade actions makes accurate projections difficult. -
Global and U.S. Economic Context
Global growth remained firm late in 2024 but has since weakened due to tariff-related uncertainty. The U.S. economy is slowing with falling business sentiment and increasing inflation expectations. In the eurozone, manufacturing remains weak. China’s economic momentum at the end of 2024 has tapered off slightly. -
Canadian Economic Trends
Canada’s economy has slowed, with weakened consumer spending, residential investment, and business activity. Labour market recovery is stalling—March employment figures declined, and businesses expect slower hiring. Wage growth is softening, and business confidence is falling.
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Inflation Pressures and Expectations
Inflation was 2.3% in March, up from 1.8% in January. Price increases have been driven by rebounding goods prices and the return of GST/HST. Upcoming CPI readings will be impacted by the removal of the carbon tax and lower oil prices, though tariffs may push some prices higher.
Per the news release, the Governing Council will balance downward inflation pressure from a weaker economy with upward pressure from cost increases. It will continue to assess risks from tariffs, business investment, and inflation expectations.
Bank of Canada states, “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.”
The next scheduled date for announcing the overnight rate target is June 4, 2025.
