OTTAWA—The Bank of Canada announced it has lowered its policy interest rate to 2.25 percent, warning that the trade war with the United States has diminished Canada’s economic prospects.
“The structural damage caused by tariffs is reducing our productive capacity and adding costs. This limits the ability of monetary policy to boost demand while maintaining low inflation,” Bank of Canada Governor Tiff Macklem said on Oct. 29.
Macklem said that if the economy were to grow in line with its projections outlined in the Bank’s October Monetary Policy Report, the current interest rate would be “at about the right level to keep inflation close to 2 percent while helping the economy through this period of structural adjustment.” He said the governing council will continue assessing economic data to make its decisions, and will be prepared to respond if their forecast changes….