Bank of Canada holds policy rate at 2¾%. FOR IMMEDIATE RELEASE Media Relations Ottawa, Ontario April 16, 2025 The Bank of Canada today maintained its target for the overnight rate at 2.75%, with the Bank Rate at 3% and the deposit rate at 2.70%. The major shift in direction of US trade policy and the unpredictability of tariffs have increased uncertainty, diminished prospects for economic growth, and raised inflation expectations. Pervasive uncertainty makes it unusually challenging to project GDP growth and inflation in Canada and globally. Instead, the April Monetary Policy Report (MPR) presents two scenarios that explore different paths for US trade policy. In the first scenario, uncertainty is high but tariffs are limited in scope. Canadian growth weakens temporarily and inflation remains around the 2% target. In the second scenario, a protracted trade war causes Canada’s economy to fall into recession this year and inflation rises temporarily above 3% next year. Many other trade policy scenarios are possible. There is also an unusual degree of uncertainty about the economic outcomes within any scenario, since the magnitude and speed of the shift in US trade policy are unprecedented. Global economic growth was solid in late 2024 and inflation has been easing towards central bank targets. However, tariffs and uncertainty have weakened the outlook. In the United States, the economy is showing signs of slowing amid rising policy uncertainty and rapidly deteriorating sentiment, while inflation expectations have risen. In the euro area, growth has been modest in early 2025, with continued weakness in the manufacturing sector. China’s economy was strong at the end of 2024 but more recent data shows it slowing modestly. Financial markets have been roiled by serial tariff announcements, postponements and continued threats of escalation. This extreme market volatility is adding to uncertainty. Oil prices have declined substantially since January, mainly reflecting weaker prospects for global growth. Canada’s exchange rate has recently appreciated as a result of broad US dollar weakness. In Canada, the economy is slowing as tariff announcements and uncertainty pull down consumer and business confidence. Consumption, residential investment and business spending all look to have weakened in the first quarter. Trade tensions are also disrupting recovery in the labour market. Employment declined in March and businesses are reporting plans to slow their hiring. Wage growth continues to show signs of moderation. Inflation was 2.3% in March, lower than in February but still higher than 1.8% at the time of the January MPR. The higher inflation in the last couple of months reflects some rebound in goods price inflation and the end of the temporary suspension of the GST/HST. Starting in April, CPI inflation will be pulled down for one year by the removal of the consumer carbon tax. Lower global oil prices will also dampen inflation in the near term. However, we expect tariffs and supply chain disruptions to push up some prices. How much upward pressure this puts on inflation will depend on the evolution of tariffs and how quickly businesses pass on higher costs to consumers. Short-term inflation expectations have moved up, as businesses and consumers anticipate higher costs from trade conflict and supply disruptions. Longer term inflation expectations are little changed. Governing Council will continue to assess the timing and strength of both the downward pressures on inflation from a weaker economy and the upward pressures on inflation from higher costs. Our focus will be on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. This means we will support economic growth while ensuring that inflation remains well controlled. Governing Council will proceed carefully, with particular attention to the risks and uncertainties facing the Canadian economy. These include: the extent to which higher tariffs reduce demand for Canadian exports; how much this spills over into business investment, employment and household spending; how much and how quickly cost increases are passed on to consumer prices; and how inflation expectations evolve. Monetary policy cannot resolve trade uncertainty or offset the impacts of a trade war. What it can and must do is maintain price stability for Canadians. Information note The next scheduled date for announcing the overnight rate target is June 4, 2025. The Bank will publish its next MPR on July 30, 2025. Read the April 16th, 2025 Monetary Report

Market Update: Navigating Economic Uncertainty in BC's Housing Market Economic Outlook from Brendan Ogmundson, CMBA-BC Conference (Following is a summary of my notes taken during Brendan’s live presentation on Tuesday April 8, 2025)  The current economic landscape is characterized by unprecedented uncertainty, according to economist Brendan Ogmundson's recent presentation at the CMBA-BC Conference. His analysis, titled "Stuck Between Stations," highlights several key factors influencing BC's housing market and broader economic outlook. Housing Market Trends Uncertainty has reached record highs—exceeding even 2020 levels—with a striking 600% increase in Canadians reporting concerns about job security. This uncertainty is directly impacting housing market decisions, particularly home buying intentions. The housing inventory situation is evolving rapidly: Listings are accumulating steadily Total active listings across the province are approaching 40,000-45,000 units Completed but unsold new inventory has reached an all-time high These inventory trends are expected to slow housing starts over the next 1-2 years. Current forecasts suggest housing prices will likely remain flat or potentially decrease in the near term. Financial Stability Despite these challenges, BC homeowners appear to be weathering the economic storm relatively well for now. Mortgage arrears and bankruptcies remain at historically low levels, though this represents an ongoing risk worth monitoring. Interest Rate Outlook The bond market continues to experience significant volatility, which is likely to persist in the coming weeks. As a result, lenders are expected to maintain current fixed rate offerings. The Bank of Canada is anticipated to implement one more rate cut, though timing remains uncertain due to inflation concerns related to emerging trade tensions. Ogmundson noted that substantial rate cuts would require a dramatic increase in unemployment—to approximately 8%—which is not the current baseline expectation. Additionally, slowing population growth combined with already poor productivity metrics is expected to reduce Canada's potential GDP growth from 2% to 1.5%. These factors may lead to a new neutral interest rate around 2.25%, with the April Monetary Policy Report potentially confirming a lowered neutral rate. Trade Tensions and Tariffs A significant portion of the presentation addressed the impact of escalating trade tensions, particularly with China. The effective tariff rate with China has now exceeded 40%, creating mechanical price increases throughout supply chains. These tariffs are projected to: Lower economic growth Increase prices by at least 2.3% Reduce disposable income by approximately $3,000 per US household The presentation characterized the potential economic contraction as a "Trumpcession," noting that recent trade policies resemble 18th-century mercantilism with its zero-sum mentality of maximizing exports while minimizing imports. Impact on British Columbia The effects of these economic headwinds will not be uniform across BC, with northern regions potentially facing greater challenges. Economic modeling suggests provincial unemployment could rise above 7%, compared to a baseline of 5% without trade tensions. As we continue to monitor these economic developments, maintaining flexibility and caution in financial and investment decisions will be crucial in navigating this period of heightened uncertainty.