Bank of Canada holds interest rate — and you can thank Donald Trump for that Mr Kevin Carmichael

2018-03-07 | 13:19:50

If not for Donald Trump, the Bank of Canada probably would be raising interest rates.

But Trump exists, and the U.S. president’s assault on the norms of global trade is so severe that the central bank has little choice but to leave borrowing costs unchanged, lest it add to the chaos.

“Trade policy developments are an important and growing source of uncertainty for the global and Canadian outlooks,” the Bank of Canada said in summing up its latest round of policy deliberations, which ended with a decision on Wednesday to leave its benchmark lending rate unchanged at 1.25 per cent.

That wasn’t a surprise.

When the Bank of Canada raised the target rate a quarter-point in January, it said it was worried about what Trump’s intentions for the North American Free Trade Agreement might be doing to the psyche of executives.


Trump’s decision to tax imports of steel and aluminum can only deepen that concern. The latest round of talks to overhaul NAFTA ended in Mexico City this week without a timeline for resolution.

“While the economic outlook is expected to warrant higher interest rates over time, some continued monetary policy accommodation will likely be needed to keep the economy operating close to potential and inflation on target,” the central bank said in its statement. “Governing Council will remain cautious in considering future policy adjustments,” the statement said.

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