Editor’s note: This article originally appeared on ParliamentToday, a Village Media newsletter devoted exclusively to covering federal politics.
U.S. president-elect Donald Trump’s tariff threat is a “major new uncertainty” for the Canadian economy, the governor of the Bank of Canada said this week.
The Bank of Canada (BoC) announced its fifth consecutive interest rate drop and second consecutive 50-basis point reduction on Thursday, so the key rate now sits at 3.25 per cent.
While BoC governor Tiff Macklem said there’s been “a lot” of cuts since the summer — with the Bank taking two “bigger than normal steps” over the last two months — he hinted it’s now time to hit the brakes and take a more “gradual approach” to monetary policy.
How long that approach will last remains unclear, given the tariff threat. Trump has vowed to make good on his promise to hit Canada and Mexico with 25 per cent tariffs upon entering the White House on Jan. 20, just nine days before the Bank’s next interest rate decision.
“We can’t run policy on something that might happen. We have highlighted that it is a major uncertainty,” Macklem told Ottawa reporters.
He noted that among the open questions are whether those tariffs will come to pass, the level at which they will be set, how Ottawa will respond if it does not get an exemption and what impact possible retaliatory tariffs may have.
Those questions are among the topics premiers discussed…
