Canada’s economic fate hangs in the balance, and all eyes are on the Bank of Canada’s big interest rate reveal tomorrow, March 12. With U.S. tariffs battering the border and recession whispers growing louder, economists are betting on a cut to ease the sting on mortgages and loans.
The last tweak came January 29, nudging the key overnight lending rate down to 3%. But with President Donald Trump’s tariff barrage kicking off this month—think 50% on Canadian steel and aluminum starting Wednesday—Governor Tiff Macklem is feeling the heat. “Trump’s wielding tariffs like a sledgehammer,” Macklem warned at the Mississauga Board of Trade on Feb. 21. “We’re in uncharted waters—think 1930s vibes. The fallout? Anyone’s guess.”
Economists are piling on the pressure. TD’s Derek Burleton forecasts a 25-basis-point trim to 2.75%. “The market’s flip-flopped—odds of a cut tanked to 30% after inflation data, then shot to 90% once Trump’s tariffs hit,” he said in a release. “A hold’s still in play, but the smart money’s on relief.”
Despite a hot job market and “robust” GDP, the bank’s got its eye on the tariff tsunami threatening exports. BMO’s Douglas Porter agrees: “They’ll nudge it down a quarter-point to brace for a slowdown and dodge a recession tailspin.” He sees the rate sliding to 2% by July, with a chance of diving deeper if inflation plays nice later this year.