Canada stares at deep depression due to U.S. tariffs and trade wars, predicts National Central Bank

Bank of Canada painted a horrible economic image on Wednesday, including the worst-case scenario of a protracted trade war with the United States, Canada’s largest trading partner, that triggered a recession and issued a soaring price.

The National Central Bank has set its main loan ratio at 2.75%, suspending recent cuts due to transfers of U.S. trade policy and tariffs. It noted that financial markets were in turmoil after steady growth at the end of 2024 and a lower inflation rate on the bank’s 2.0% target, oil prices fell, and the Canadian dollar praised the huge dollar weakness.

“The major shift in U.S. trade policy direction and unpredictability of tariffs have increased uncertainty, the outlook for economic growth has decreased, and increased inflation expectations,” the central bank said in a statement.
The bank said tariff announcements and uncertainty have reduced consumer and business confidence, resulting in lower consumption and business spending, as well as fewer hiring and slower hiring.

The bank said in the short term that prices will rise due to trade conflicts and supply disruptions.

But it said it would “cautiously” and continue to assess “upward pressure on economic weaker inflation and higher cost inflationary pressures.” “Monetary policy cannot address trade uncertainty or offset the impact of the trade war,” it added. “What it can and has to do is maintain price stability for Canadians,” the Bank of Canada said.

FAQ

Q1. What do we know about the loan ratio in Canada?
A1. Bank of Canada’s main loan interest rate is 2.75%, suspending recent cuts due to rapidly changing U.S. trade policies and tariffs.

Q2. What did the Canadian Bank say?
A2. Bank of Canada said tariff announcements and uncertainty have reduced consumer and business confidence, resulting in lower consumption and business spending, as well as fewer jobs and slower hiring.