Canadian Central Bank Reduces Interest Rate to 2.25%
The Bank of Canada has lowered its benchmark interest rate to 2.25%, citing an economic slowdown caused by tariffs imposed by US President Donald Trump. The central bank stated that the economy is undergoing a “structural adjustment” as trade relations with the US evolve.
Second Consecutive Interest Rate Cut
This reduction of a quarter point marks the second consecutive interest rate cut by the Bank of Canada since Trump’s return to office in January. The central bank has been closely monitoring the effects of Trump’s protectionist trade policies.
Bank of Japan Maintains Interest Rates
In contrast, the Bank of Japan kept its key interest rate unchanged at 0.5%, as economists had predicted.
New Japanese Prime Minister Sanae Takaichi
The decision was announced following the Bank of Japan’s first monetary policy meeting since Sanae Takaichi became Japan’s new Prime Minister. Takaichi is known for her support of monetary easing and active fiscal spending to stimulate the economy.
“There are significant uncertainties regarding the impact of trade policies and other measures on economic activity and prices, both domestically and internationally,” the Bank of Japan stated in a post-monetary decision communication.
Key Questions and Answers
- What did the Bank of Canada do? The Bank of Canada reduced its benchmark interest rate to 2.25%.
- Why did the Bank of Canada make this change? The central bank cited an economic slowdown caused by tariffs imposed by US President Donald Trump, stating that the economy is undergoing a “structural adjustment” as trade relations with the US evolve.
- What action did the Bank of Japan take? The Bank of Japan maintained its key interest rate at 0.5%.
- Who is the new Japanese Prime Minister? Sanae Takaichi, who supports monetary easing and active fiscal spending to stimulate the economy, became Japan’s new Prime Minister.
- What uncertainties does the Bank of Japan acknowledge? The Bank of Japan acknowledges significant uncertainties regarding the impact of trade policies and other measures on economic activity and prices, both domestically and internationally.
