Institutions: The threshold for Canada's rapid interest rate cuts may be higher

On March 13, Jinshi Data News, analysts at the National Bank of Canada (NBF) stated that in its latest communication of a 25 basis point rate cut, the Central Bank of Canada not only took a tough stance on inflation risks but also no longer mentioned excess capacity or idle capacity in the economy. Instead, the Central Bank of Canada indicated that given the far stronger than expected rise in the economy in the fourth and third quarters of last year, the Canadian economy is on a solid footing for 2025. NBF believes that the economy is still weak. However, the Central Bank of Canada’s changing views on inflation risks “indicate that the threshold for rapid rate cuts is higher than we imagined.” The company added that the Central Bank of Canada will heavily rely on data and will not simply cut rates because of expected trade disputes leading to economic weakness.