Inflation caused by tariffs could force the Bank of Canada to raise interest rates by up to 1.25 percent, a level that exceeds those in many other countries, a new report suggests.
“Together with the rise in domestic tariff rates, this results in tighter monetary policy than otherwise in other countries, particularly those whose currencies have depreciated against the U.S. dollar,” reads the report by the Organisation for Economic Co-operation and Development (OECD).
Interest rates would rise by 0.25 percent to 0.5 percent on average in other “advanced and major emerging market economies,” the OECD said.
The growth outlook for most of the 38 countries was cut back in the March 17 report, with global growth predicted to slow to 3.1 percent in 2025 and 3 percent in 2026 due to higher trade barriers and geopolitical and policy uncertainty impacting investment and household spending….