2033 GMT - The Bank of Canada is entering a period of great uncertainty and will likely need to cut interest rates cautiously, says Jason Daw, head of North America Rates Strategy at RBC Dominion Securities. Daw had expected the BOC to cut rates by 25 bps at each of its next four meetings, ending with a terminal cash rate of 2%. But that call did not account for tariffs. If the tariffs last longer than 3-6 months, the chance of the overnight rate ending 2025 above 2% is small, he says. More likely it is below. The fiscal response in Canada to the economic shock will be critical to how the BOC reacts. The risks are hard to quantify and add to the case for a cautiously cutting BoC, Daw adds. (james.glynn@wsj.com; @JamesGlynnWSJ)
(END) Dow Jones Newswires
February 02, 2025 15:33 ET (20:33 GMT)
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