The Bank of Canada delivered another interest rate cut on Wednesday, reducing its policy rate by a quarter percentage point to three per cent. But looming U.S. tariffs are weighing on the central bank香蕉视频直播檚 economic outlook.

The cut, the central bank香蕉视频直播檚 sixth consecutive one since June, comes as the central bank said inflation is sitting around its two per cent target and the economy is picking up speed.

香蕉视频直播淭here are signs economic activity is gaining momentum as past interest rate cuts work their way through the economy,香蕉视频直播� Bank of Canada governor Tiff Macklem said in prepared remarks.

But Canada香蕉视频直播檚 economic outlook is clouded in uncertainty with U.S. tariffs looming.

Donald Trump has threatened Canada with 25 per cent tariffs on all goods, but when the U.S. President might make good on his threat 香蕉视频直播� and to what extent 香蕉视频直播� remains to be seen.

In its monetary policy report released Wednesday, the Bank of Canada revised lower its GDP forecast.

It expects the country香蕉视频直播檚 GDP to grow by 1.8 per cent in 2025 and 2026, down from its previous projections of 2.1 and 2.3 per cent, respectively.

The revised projection factors in lower population growth 香蕉视频直播� and population decline in 2026 amid new federal immigration targets 香蕉视频直播� and a downward revision to business investment from increasing policy uncertainty.

But the forecast assumes Trump won香蕉视频直播檛 make good on his tariff threat. If he does, the outlook is far bleaker.

香蕉视频直播淲e don香蕉视频直播檛 know the scope of retaliatory measures or what fiscal supports will be provided,香蕉视频直播� Macklem said.

香蕉视频直播淎nd even when we know more about what is going to happen, it will still be difficult to be precise about the economic impacts because we have little experience with tariffs of the magnitude being proposed.香蕉视频直播�

The central bank presented four scenarios if the U.S. hits Canada with 25 per cent tariffs, and Canada responding in kind dollar-for-dollar.

The impact of tariffs, the Bank of Canada projected, would lower Canada香蕉视频直播檚 GDP by 2.4 per cent in the first year whenever tariffs come in.

Such a scenario 香蕉视频直播� what the central bank is calling its 香蕉视频直播渂enchmark calibration香蕉视频直播� 香蕉视频直播� assumed Canadian exports react to price changes in line with historical norms and the cost of tariffs were fully passed on to consumer prices over three years.

So, if Trump imposed tariffs this year, the shock could be large enough to send Canada into a recession 香蕉视频直播� by comparison of the Bank of Canada香蕉视频直播檚 projection of a 1.8 GDP growth in 2025.

In another scenario, using the same parameters as the benchmark except the cost of tariffs are passed on in half the amount of time, the impact to Canada香蕉视频直播檚 inflation rate in the first year could be 0.8 per cent in the first year, and 1.3 per cent in the next year.

In December, the Bank of Canada signalled that more rate cuts would be coming through 2025, but it would take a more gradual approach to them 香蕉视频直播� in contrast to the back-to-back jumbo cuts that closed out 2024.

This report by The Canadian Press was first published Jan. 29, 2025.

Nick Murray, The Canadian Press