Bank of Canada considered leaving rates unchanged, governor tells Reuters #CanadaFinance

By Promit Mukherjee and Caroline Stauffer

OTTAWA, March 12 (Reuters) – The Bank of Canada considered leaving its key policy rate at 3% ahead of a scheduled announcement on Wednesday before concluding it needed to cut for the seventh consecutive time, Governor Tiff Macklem said in an interview.

The central bank trimmed its key policy rate by 25 basis points to 2.75% and raised concerns about inflationary pressures and weaker growth stemming from trade uncertainty and President Donald Trump’s tariffs.

“We did discuss the option of staying at 3% as well as cutting to 2.75% … the argument for staying at 3% was growth has been stronger than we expected,” Macklem said.

Given the uncertainty about the course of U.S. trade and tariff policy, “one approach was, why don’t we wait until things were a little clearer?” he added.

The bank decided to cut because surveys showed the tariff threat had shaken consumer and business confidence and this would have a material effect on domestic demand, he said, also noting higher tariffs would cut foreign demand.

“So against that background, in combination with the fact that inflation is close to 2%, the Governing Council was convinced that the most appropriate course of action was to cut the policy rate by 25 basis points,” he said.

(Editing by David Ljunggren)

((Reuters editorial bureau; [email protected]))

Keywords: CANADA CENBANK/GOVERNOR