Economic Growth vs. Inflation

Economists predict that new tariffs from the U.S. could force the Bank of Canada (BoC) to prioritize economic growth over inflation control. RBC and TD analysts suggest the central bank may need to cut interest rates despite rising prices.

Potential Impact of Tariffs

• GDP could shrink by 5% if tariffs are severe and long-lasting.

• Inflation may rise to 3%, the upper limit of the BoC’s target range.

• Interest rates could drop below the current 3% to counter economic downturns.

BoC’s Next Steps

Governor Tiff Macklem acknowledges the complexity: tariffs weaken growth but drive inflation higher. Economists predict further rate cuts if trade tensions persist.

What’s Next?

The BoC's next rate decision is on March 12, with experts divided on whether further cuts are coming.