According to the Bank’s latest Summary of Governing Council Deliberations, it was the sheer unpredictability of U.S. trade policy—and how it might ripple through the Canadian economy—that led policymakers to stay on the sidelines.

With major tariffs announced by the U.S. earlier this month and more possibly on the way, the Bank said it simply couldn’t forecast with confidence how growth or inflation might evolve.

Instead, they chose to pause and gather more information.

With tariffs imposed by the U.S. on April 2 and more potentially on the way, Council members said the situation “made it impossible to project economic growth and inflation with any degree of confidence.”

Rather than issue a single base-case forecast, the Bank presented two scenarios: one in which tariffs are short-lived, and another in which they persist and push inflation above 3% by 2026.

A wait-and-see approach

While some Council members favoured an additional rate cut—citing worsening business and consumer sentiment, weakening housing activity, and a stalling job market—others urged caution.

“Continuing to lower the policy interest rate at this meeting could end up being premature in a context where past cuts were still working their way through the economy and where upward pressure on inflation from tariffs could come through quickly,” they said. In a situation where inflation risks could go either way, they felt it was better to wait.

Ultimately, members agreed the risks were simply too hard to weigh and that the “unusually large range of unknowns clouding the outlook” were enough to keep rates on hold.

What it means for borrowers

The Bank didn’t shut the door on more rate cuts—far from it. Members emphasized that if the data begins to point clearly to stronger disinflation or a sharper economic slowdown, they are “prepared to act decisively.”

“Members agreed that in the face of tariffs, monetary policy should support the economy while maintaining its primary focus on price stability,” the minutes read.

For now, variable-rate mortgage holders can expect rates to stay where they are at least until the Bank’s next rate decision in June.

As we recently reported, economists from the big banks broadly agree the Bank is likely to lower its policy by another 25 to 50 basis points, bringing it to a rate of 2.00% to 2.25%.

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Last modified: April 30, 2025