Wednesday April 16, 2025 | NATIONAL ECONOMIC NEWS [Reporting from VICTORIA, BC]
by Mary P Brooke | Island Social Trends
In a time of uncertainty in the economy, it was probably a surprise to few people that the Bank of Canada today maintained its target for the overnight rate at 2.75%,
“In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence,” the Bank stated in their April 16 announcement.
“Consumption, residential investment and business spending all look to have weakened in the first quarter,” the Bank of Canada included in their announcement that was released at 9:45 am ET (6:45 am PT).
Further descriptive was provided: “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.”
“The in rate is right in the middle of our neutral zone,” said Bank of Canada Governor Tiff Macklem today.
Flexible and adaptable:
“We’re navigating carefully,” said Macklem during the Bank of Canada press conference held this morning. “A lot has happened in the last five weeks since our March policy decision.”
“We’re being less forward-looking than normal.,” said Macklem for being in “a period of very elevated uncertainty”.
Macklem emphasized that the Bank is trying to be “flexible and adaptable”, as stated during the press conference this morning.
“We don’t want them worrying about ongoing inflation,” said Macklem about Canadians.
Deputy Governor Carolyn Rogers says she expects that businesses are doing the same as the Bank, that is “hoping for some clarity”.
Avoiding precision:
Macklem doesn’twant to give Canadians “a false sense of precision”. He reiterated that the Canadian economy is dealing with “erratic unpredictable course of US trade policy”.
“Every Canadian is coping with this. We’re outlining how we’re managing through it,” said Macklem.
Some mitigating factors on inflation:
Inflation was 2.3% in March, lower than in February but still higher than 1.8% at the time of the January monetary policy report.
“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, the bank stated in its announcement this morning.
“Starting in April, CPI inflation will be pulled down for one year by the removal of the consumer carbon tax.”
The faster that businesses pass costs onto consumers will indicate how fast inflation might grow, Macklem explained.
“This is a more unprecedented shock that in a one hundred years. The economy is very weak. That is creating downward pressure on inflation. We’re going to be assessing upward and downward pressures on inflation,” said Macklem today.
Next rate announcement in June:
The next scheduled interest rate announcement is scheduled for June 4, 2025 which is after the April 28 federal election and when the tariff situation with the United States may look very different than it does right now.
“Our goal is to ensure that Canadians stay confident in price stability,” said Macklem today.
The next monetary policy report is scheduled for mid-summer on July 30, 2025).
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NEWS SECTIONS: BANK OF CANADA | BUSINESS & ECONOMY | TARIFFS & TRADE