With the Bank of Canada’s (BoC) next interest rate announcement scheduled for April 16, 2025, uncertainty is running high. Economists remain divided on whether the BoC will hold or cut the policy rate for the eighth time since June 2024, as global trade tensions and domestic economic signals collide.
As of the last cut on March 12, the BoC’s overnight rate sits at 2.75%. Inflation is easing, but remains sticky in core categories, while GDP, employment, and consumer sentiment tell a mixed story. Canada’s “Big Five” banks – TD, RBC, BMO, CIBC, and Scotiabank – are each offering their own predictions ahead of Wednesday’s closely watched decision.
TD: Rate Cut Leaning Likely Amid Sinking Sentiment
TD Economist Marc Ercolao suggests the Bank of Canada may cut another 25 basis points as a precautionary move, especially given the weakened outlook from the BoC’s recent business and consumer surveys.
“The door is certainly open for the Bank to trim the policy rate,” Ercolao wrote, citing a drop in sentiment and market volatility stemming from tariff tensions (Ercolao, 2025).
TD’s base case: Cut to 2.5% on April 16 and further to 2.25% in Q2.
Source: Ercolao, M. (2025, April 12). TD Economics Weekly Update. TD Bank Group.
RBC: A Cautious Cut to Hedge Against Tariff Fallout
RBC’s Nathan Janzen and Abbey Xu call this week’s decision “another close call,” but favor a rate cut to protect against escalating US tariff risks. With employment dropping by 33,000 jobs and a cooling housing market, the case for easing is clear.
“Fiscal policy may be better suited to address trade shocks,” they note, “but monetary policy can still play an insurance role” (Janzen & Xu, 2025).
RBC’s projection: A 25 bps cut followed by a hold at 2.25% through 2025.
Source: Janzen, N., & Xu, A. (2025, April 11). RBC Economic Update. Royal Bank of Canada.
BMO: Watching Inflation Before Committing
Douglas Porter at BMO is leaning toward a hold, especially with March inflation expected to be high. However, weak job numbers and geopolitical uncertainty keep a cut on the table.
“The situation is fluid,” Porter wrote, “but the BoC is cautious about overcommitting to cuts” (Porter, 2025).
Forecast: Hold at 2.75% in April, with a drop to 2.0% by Q3.
Source: Porter, D. (2025, April 12). BMO Economics Weekly Summary. Bank of Montreal.
CIBC: Cut Still Warranted Despite Market Expectations
CIBC’s Avery Shenfeld breaks from consensus, arguing the BoC should still cut by 25 bps even though markets are leaning toward a pause.
“We find ourselves in the minority,” Shenfeld admits, but warns that tariff uncertainty and weak business confidence warrant action (Shenfeld, 2025).
Their view: A “hawkish cut” to 2.5% now, with a longer-term move to 2.25% by June.
Source: Shenfeld, A. (2025, April 12). CIBC Global Markets Insight. Canadian Imperial Bank of Commerce.
Scotiabank: Cautious Hold Amid Mixed Signals
Scotiabank’s Derek Holt expects a hold but admits it’s a nail-biter. With core inflation still hot, and election-related policy noise in play, the Bank may choose to stay the course – nervously.
“Our (nervous) call is a hold,” Holt notes, citing lingering inflation pressures, retaliatory tariffs, and lagging stimulus from immigration and past rate cuts (Holt, 2025).
Outlook: Hold at 2.75% for the remainder of the year.
Source: Holt, D. (2025, April 11). Scotiabank Global Economics Report. Bank of Nova Scotia.
Conclusion: No Clear Consensus, All Eyes on April 16
Canada’s top economists are split – some see a case for insurance cuts, while others urge restraint amid hot inflation data. With trade policy, employment softness, and domestic political uncertainty swirling, the BoC’s decision could go either way. The April 16 rate announcement will be a pivotal moment for Canada’s monetary policy direction in 2025.
References
Ercolao, M. (2025, April 12). TD Economics Weekly Update. Toronto-Dominion Bank. Retrieved from https://economics.td.com
Janzen, N., & Xu, A. (2025, April 11). RBC Economic Update: Another close call for policymakers. Royal Bank of Canada. Retrieved from https://thoughtleadership.rbc.com
Porter, D. (2025, April 12). BMO Economics Weekly Summary: March jobs stumble. Bank of Montreal. Retrieved from https://economics.bmo.com
Shenfeld, A. (2025, April 12). CIBC Global Markets Insight: A hawkish cut still warranted. Canadian Imperial Bank of Commerce. Retrieved from https://economics.cibccm.com
Holt, D. (2025, April 11). Scotiabank Global Economics Report: Our (nervous) call is a hold. Scotiabank. Retrieved from https://www.scotiabank.com/ca/en/about/economics.html
Bank of Canada. (2025, March 12). Monetary Policy Report – March 2025. Retrieved from https://www.bankofcanada.ca
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