On March 12, the Bank of Canada trimmed its policy interest rate by 0.25 percentage points to 2.75%—the seventh rate cut in a row.

Yesterday, the Bank published a summary of the deliberations that took place ahead of that decision. The deliberations are meant to provide a better sense of why the Bank’s Governing Council decided what it did and where it thinks monetary policy is heading.

With regard to the former, it came down to tariffs. In fact, “in the absence of tariff threats and elevated uncertainty, the decision would probably have been to maintain the policy interest rate at 3%.”

With regard to the latter, no forward guidance was offered: “Members agreed that, given the fluidity of the situation, the complexity of the shock and the considerable amount of uncertainty around the outlook, it would not be appropriate to provide guidance on the future path for the policy interest rate.”

Ideally, interest rate decisions should not be surprises as this creates uncertainty, hinders planning and exacerbates economic instability. With that said, maybe “monitoring developments closely” is the best approach given the chaotic nature of current U.S. trade policy?

The Bank did say it will be assessing “the balance between the upward pressures on inflation from higher costs and the downward pressures from weaker demand,” but stopped short of saying what would actually trigger another cut, a pause or an increase.

Just like the Bank, we will all have to wait and see.

In the meantime, the gap between the policy rate in Canada and the U.S. has been growing with the Bank of Canada cutting twice so far this year while the U.S. Federal Reserve has kept its finger on the pause button (see the chart below).

Unlike the Bank, we’ve made a call: our latest forecast assumes the Bank will see through the transitory impacts of tariffs on inflation and focus on helping the economy weather the tariff storm by cutting rates to 2.0% or lower by the end of the year. Our call does come with a caveat in that it also assumes longer-term inflation expectations remain anchored near 2%.

The next Bank of Canada interest rate announcement is scheduled for April 16.

Answer to the previous trivia question: Kim Campbell was the first and only woman to serve as Prime Minister of Canada.

Today’s trivia question: Who was Canada’s youngest Prime Minister when sworn into office?