Bank Of Canada Expected To Cut Interest Rates 25-Basis Points

The Bank of Canada is widely expected to lower interest rates another 25-basis points when it announces its latest policy decision on Jan. 29. The central bank is scheduled to announce its first rate decision and outlook on the economy since U.S. President Donald Trump returned to power. As such, many analysts are expecting the Bank of Canada to provide an analysis on the impact of potential U.S. tariffs on the Canadian economy. Trump has threatened to enact blanket tariffs of up to 25% on Canadian goods starting on Feb. 1. Canada’s federal government has promised tit-for-tat retaliation, raising fears of a trade war. Futures traders are currently betting on an 83% chance of a 25-basis point interest rate cut from the Bank of Canada in coming days. If the central bank cuts as expected, it would be the sixth consecutive rate cut since June of last year, lowering rates a total of 200 basis points and taking the benchmark overnight interest rate down to 3%. Economists surveyed by the Reuters news agency said it is difficult to forecast the direction of rates in Canada beyond the upcoming meeting due to the threat of U.S. tariffs.Bank of Canada Governor Tiff Macklem will announce the decision on interest rates in Ottawa on the morning of Jan. 29. The central bank will also release its first monetary policy report of the year, in which it will update its projections on inflation and the overall economy.