A comparison of the March statement to the April statement reflects the “major shift” in the US trade policy and unpredictability of tariffs. Hence the second verse (April) is no where near the first (March).
Below is the red line change (or rather the complete re-write)
FOR IMMEDIATE RELEASE
March 12, 2025
The Bank of Canada today reduced
its target for the overnight rate to
2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%.
The Canadian economy entered 2025 in a solid
position, with inflation close to the 2% target and robust GDP growth. However,
heightened trade tensions and tariffs imposed by the United States will likely
slow the pace of economic activity and increase inflationary pressures in
Canada. The economic outlook continues to be subject to more-than-usual
uncertainty because of the rapidly evolving policy landscape.
After a period of solid growth, the US economy
looks to have slowed in recent months. US inflation remains slightly above
target. Economic growth in the euro zone was modest in late 2024. China’s
economy has posted strong gains, supported by government policies. Equity
prices have fallen and bond yields have eased on market expectations of weaker
North American growth. Oil prices have been volatile and are trading below the
assumptions in the Bank’s January Monetary Policy Report (MPR).
The Canadian dollar is broadly unchanged against the US dollar but weaker
against other currencies.
Canada’s economy grew by 2.6% in the fourth quarter
of 2024 following upwardly revised growth of 2.2% in the third quarter. This
growth path is stronger than was expected at the time of the January MPR. Past
cuts to interest rates have boosted economic activity, particularly consumption
and housing. However, economic growth in the first quarter of 2025 will likely
slow as the intensifying trade conflict weighs on sentiment and activity.
Recent surveys suggest a sharp drop in consumer confidence and a slowdown in
business spending as companies postpone or cancel investments. The negative
impact of slowing domestic demand has been partially offset by a surge in
exports in advance of tariffs being imposed.
Employment growth strengthened in November through
January and the unemployment rate declined to 6.6%. In February, job growth
stalled. While past interest rate cuts have boosted demand for labour in recent
months, there are warning signs that heightened trade tensions could disrupt
the recovery in the jobs market. Meanwhile, wage growth has shown signs of
moderation.
Inflation remains close to the 2% target. The
temporary suspension of the GST/HST lowered some consumer prices, but January’s
CPI was slightly firmer than expected at 1.9%. Inflation is expected to
increase to about 2½% in March with the end of the tax break. The Bank’s
preferred measures of core inflation remain above 2%, mainly because of the
persistence of shelter price inflation. Short-term inflation expectations have
risen in light of fears about the impact of tariffs on prices.
While economic growth has come in stronger than
expected, the pervasive uncertainty created by continuously changing US tariff
threats is restraining consumers’ spending intentions and businesses’ plans to
hire and invest. Against this background, and with inflation close to the 2%
target, Governing Council decided to reduce the policy rate by a further 25
basis points.
Monetary policy cannot offset the impacts of a
trade war. What it can and must do is ensure that higher prices do not lead to
ongoing inflation. Governing Council will be carefully assessing
the timing and strength of both the downward pressures on inflation from a
weaker economy and the upward pressures on inflation from higher costs. The.
Council will also be closely monitoring inflation expectations. The Bank is
committed to maintaining price stability for Canadians
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