The Bank of Canada’s rate-cutting streak came to an end Wednesday as economic uncertainty resulting from a trade war with the U.S. wreaks havoc on monetary policy.

The Bank of Canada held its benchmark interest rate at 2.75% after introducing seven consecutive cuts dating back to mid-2024.

“A lot has happened since our March decision five weeks ago, but the future is really no clearer,” BoC Governor Tiff Macklem told reporters after the hold was announced. “We still do not know what tariffs will be imposed, whether they’ll be reduced or escalated and how long all of this will last. 

“That means being less forward-looking than usual until the situation is clearer.”

He had warned in March that the central bank would likely shift its strategy and decide on U.S. President Donald Trump’s on-again, off-again tariffs and animosity towards Canada, its largest trading partner, rendered the market and analysts unable to predict what the BoC would do Wednesday. Analysts were split after most had correctly anticipated each of the previous cuts.

Mark Fieder, head of Avison Young’s Canadian business, expressed disappointment with the BoC’s decision. He said it will hinder commercial real estate investment.

But Fieder did not criticize the hold.

“The recent Bank of Canada decision to hold interest rates unchanged is unfortunate news, as we expect this will either slow or halt many transactions that have been on the sidelines anticipating a rate cut – although we recognize the Bank’s rationale is informed by greater issues at play in the broader economic landscape,” said Fieder.

“Looking ahead, we have a watchful eye on tariff decisions and the repercussions on the commercial real estate industry, particularly in the industrial sector.”

Contrary to traditional practice, the BoC did not issue an economic growth forecast with the rate decision for the second straight month. But the bank expects second-quarter GDP to weaken considerably after anticipating a 1.8% increase for the first quarter.

“Forecasts for economic growth are of little use as a guide to anything,” Macklem said.

TD Senior Economist James Orlando said the bank’s rate announcement and monetary policy report, which described the two scenarios, gave the impression that another cut had occurred.

“It highlighted the downside risks to the economy, with both scenarios showing a level of weakness that is deserving of further rate cuts,” he wrote in a research note. “And it’s not just hypotheticals and sentiment surveys showing fragility.

“The real estate market has rolled over as Canadians grow more hesitant.”

Orlando said Canada’s economy has “rolled over” due to the trade war and lower employment and retail sales, along with easing inflation, “opened the door for rate cuts today, but the BoC decided not to walk through it.”

Orlando noted that market pricing for a June rate cut jumped about 50 basis points Wednesday. He said the economy has already started to show weakness that is expected to continue in coming months.

“This means the BoC should resume cutting rates at its next meeting on June 4th,” wrote Orlando.

Pictured: Bank of Canada headquarters in Ottawa.

Photo:  Boueloussa Milebamane / Shutterstock.com

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