{"id":77571,"date":"2026-08-25T12:00:55","date_gmt":"2026-08-25T12:00:55","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2026\/08\/25\/posthaste-if-trade-war-persists-bank-of-canadas-next-move-could-be-a-cut\/"},"modified":"2026-08-25T12:00:55","modified_gmt":"2026-08-25T12:00:55","slug":"posthaste-if-trade-war-persists-bank-of-canadas-next-move-could-be-a-cut","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2026\/08\/25\/posthaste-if-trade-war-persists-bank-of-canadas-next-move-could-be-a-cut\/","title":{"rendered":"Posthaste: If trade war persists, Bank of Canada's next move could be a cut"},"content":{"rendered":"
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With the recent and dramatic blowup of trade tensions between the United States and Canada, it\u2019s easy to forget that an interest rate decision is just days away. <\/p>\n

The Bank of Canada will announce its rate on Wednesday, Sept. 2, and while a hold is almost certain, the storm brewing between Ottawa and Washington could force an unexpected change in course down the road. <\/p>\n

Most economists expected the central bank to hold its rate steady this year and the trade dispute has just increased that likelihood. It\u2019s the gradual hikes in 2027 that have now come into question. <\/p>\n

\u201cIf the trade war persists and\/or worsens, the bank\u2019s job becomes much harder,\u201d said National Bank of Canada strategists Taylor Schleich and Ethan Currie in a note Monday. <\/p>\n

Though the 50-per-cent-tariffs on $28-billion worth of Canadian goods imposed Saturday are relatively narrow they could further weaken business confidence. If they remain in place, National estimates 100,000 to 130,000 Canadian jobs could be at risk. <\/p>\n

Retaliation from Canada, followed by counter measures from the U.S. , could increase the shock to the economy. <\/p>\n

\u201cGiven recent developments, the likelihood of rate cuts has clearly grown,\u201d said the strategists. <\/p>\n

At the same time the central bank may have to deal with inflation rising above its comfort zone of 1 to 3 per cent if Canada\u2019s counter tariffs hike prices. <\/p>\n

Schleich and Currie noted that even though markets took rate cuts off the table when the Iran war started, the Bank of Canada did not. <\/p>\n

Even when oil prices soared, policy makers said that U.S. trade restrictions might make easing necessary. In July, the governing council said it was \u201cprepared to adjust monetary policy as needed.\u201d <\/p>\n

However, the central bank has also long maintained that monetary policy \u201ccannot offset the impacts of a trade war,\u201d and that targeted fiscal support to industries and households is a more effective remedy. <\/p>\n

Finance Minister Francois-Philippe Champagne and a host of other ministers will unveil measures this morning that sources say will be similar to COVID-19 economic support programs in response to the new round of tariffs. <\/p>\n

For now National Bank is keeping its call that the Bank of Canada will begin raising rates in early 2027, but admits the forecast is \u201cfragile.\u201d <\/p>\n

\u201cIf the trade war persists \u2026 the Bank of Canada\u2019s next move is likely to be a cut with the timing dependent on the evolution of economic and inflation data,\u201d they said. <\/p>\n

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Sign up here to get Posthaste delivered straight to your inbox.<\/strong><\/em> <\/p>\n

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Canada has some work to do if the nation is to face a higher tariff environment, say economists with the National Bank of Canada. <\/p>\n

National\u2019s chart shows how Canada has slid from 5th to 19th place in global competitiveness, making it imperative that federal and provincial governments tackle the regulation, taxation and interprovincial trade barriers that have contributed to the decline. <\/p>\n

\u201cThat is an uncomfortable starting point from which to confront a more protectionist global trade regime,\u201d said National chief economist Stefane Marion and Evelyne Gosselin. <\/p>\n

\u201cIt\u2019s time for our political leaders to deliver made-in-Canada solutions.\u201d <\/p>\n

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      If your child is starting high school next month, you may think you have time to start planning financially for their post-secondary education. The truth is, you are already late. <\/p>\n

      Financial Post columnist Garry Marr offers parents some tips on saving for their children\u2019s eduction, including registered education savings plans and tax free savings accounts. <\/p>\n

      Find out more <\/p>\n

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      <\/span>\"\" Interested in energy? The subscriber-only FP West: Energy Insider newsletter brings you exclusive reporting and in-depth analysis on one of the country\u2019s most important sectors. Sign up here. <\/p>\n

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      Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at <\/span>wealth@postmedia.com<\/span> with your contact info and the gist of your problem and we\u2019ll find some experts to help you out while writing a Family Finance story about it (we\u2019ll keep your name out of it, of course).<\/span><\/div>\n
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      Want to learn more about mortgages? Mortgage strategist Robert McLister\u2019s Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won\u2019t want to miss. Plus check his mortgage rate page for Canada\u2019s lowest national mortgage rates, updated daily. <\/p>\n

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      Financial Post on YouTube<\/h2>\n

      Visit the Financial Post\u2019s YouTube channel for interviews with Canada\u2019s leading experts in business, economics, housing, the energy sector and more. <\/p>\n

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      Today\u2019s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff and Bloomberg.<\/em> <\/p>\n

      Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@postmedia.com . <\/p>\n

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        Posthaste: If trade war persists, Bank of Canada's next move could be a cut<\/a>
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        2026-08-25 12:00:55<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

        With the recent and dramatic blowup of trade tensions between the United States and Canada, it\u2019s easy to forget that an interest rate decision is just days away. The Bank…<\/p>\n","protected":false},"author":2,"featured_media":77572,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/smartcdn.gprod.postmedia.digital\/financialpost\/wp-content\/uploads\/2026\/08\/bank-of-canada-0825-ph.jpg","fifu_image_alt":"","footnotes":""},"categories":[31],"tags":[],"class_list":["post-77571","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy"],"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/77571","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=77571"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/77571\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/77572"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=77571"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=77571"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=77571"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}