The Bank of Montreal broke with consensus that the Bank of Canada will cut its main interest rate by 25 basis points to 2.5% in April. In its latest interest rate forecast, the firm expects the Bank of Canada's policy rate to reach 2% this summer, citing the looming tightening of U.S. President Donald Trump's tariff policy. The Bank of Canada is widely expected to pause its rate cuts in April due to accelerating inflation.
In a speech, Bank of Canada Governor Mike Lime reiterated the risk of tariff-induced inflation, adding that the increase in prices in February "caught our attention". The Bank of Montreal said that while the CPI is likely to remain high in March, it is expected to cool in April due to the Liberal government's removal of the carbon tax ahead of the election. The bank said a pause in interest rate action in April is feasible, but prefers to cut rates as the economy "succumbs to the expected recession".
The Bank of Canada is expected to cut interest rates in April as the economy faces recession risks
2025-03-21 01:47:45
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