Bank of Montreal (BMO) has revised its outlook for Canadian interest rates in response to the economic impact of Trump’s 25% tariff.
- BMO now anticipates the Bank of Canada will implement six consecutive quarter-point interest rate cuts, bringing the policy rate down to 1.5% by October.
This shift in expectations reflects concerns about the potential fallout from heightened trade tensions, which could dampen economic growth, disrupt supply chains, and increase costs for Canadian businesses and consumers. BMO’s updated forecast suggests that the Bank of Canada will adopt a more aggressive easing cycle to counteract these headwinds, support domestic demand, and mitigate the risk of an economic slowdown.
The anticipated rate cuts are also expected to influence the Canadian dollar, potentially putting downward pressure on the currency, while providing some relief to borrowers through lower lending costs. BMO’s outlook underscores the growing uncertainty in the global economic landscape and the need for a more accommodative monetary policy to navigate potential challenges ahead.