

In response to the economic turbulence triggered by Donald Trump’s 25% tariffs on Canadian goods, the Bank of Montreal (BMO) has significantly revised its interest rate outlook. The financial institution now projects that the Bank of Canada (BoC) will implement six consecutive quarter-point interest rate cuts, bringing the policy rate down to 1.5% by October.
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This shift reflects mounting concerns over trade tensions, which threaten to stifle economic growth, disrupt supply chains, and escalate costs for businesses and consumers alike. With inflationary pressures and economic uncertainty on the rise, BMO anticipates that the BoC will take a more aggressive approach to monetary easing, aiming to bolster domestic demand and counteract the risk of a slowdown.
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How Will Rate Cuts Impact Canadians?
The anticipated rate cuts will likely have a significant impact on multiple fronts:
- Weaker Canadian Dollar – As interest rates drop, the loonie could decline further, making imports more expensive while potentially benefiting exporters.
- Lower Borrowing Costs – Reduced interest rates could offer relief to mortgage holders, businesses, and consumers looking to take on new loans.
- Market Volatility – A more accommodative monetary policy may spur investment but also raise concerns about long-term financial stability.
BMO’s forecast highlights the growing economic uncertainty amid escalating global trade tensions, emphasizing the necessity for a proactive approach to monetary policy. As Canada braces for potential economic headwinds, all eyes will be on the Bank of Canada’s next move.
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