The Bank of Canada's Governing Council convened to deliberate on the monetary policy decision scheduled for April 16, 2025. This meeting comprised a crucial stage of decision-making, occurring after all briefings and recommendations from staff had been reviewed.

The policy discussion began on April 9, with Governor Tiff Macklem presiding over the gatherings. Senior Deputy Governor Carolyn Rogers, along with Deputy Governors Toni Gravelle, Sharon Kozicki, Nicolas Vincent, Rhys Mendes, and Michelle Alexopoulos, were also present.

The Council recognized the prevalent trade uncertainty primarily driven by the ongoing US-led trade conflict. Members agreed that the unpredictability of tariff announcements prevented confident projections of economic growth and inflation. Instead of a single forecast, two scenarios were developed to guide monetary policy deliberations. These scenarios were not forecasts but represented just two possibilities among many for economic outcomes due to US trade policy.

Discussions on recent global economy developments noted that global growth remained solid by late 2024, but early 2025 showed some slowing. In the US, growth eased after a strong 2024, and sentiment worsened after tariffs were introduced on April 2, 2025, affecting inflation expectations.

Similarly, the euro area economy expanded modestly while facing challenges in manufacturing. China's economic growth exceeded expectations at the end of 2024 due to increased exports in anticipation of tariff implementation.

Financial markets experienced turmoil, as larger-than-anticipated tariffs announced on April 2 led to sharp revaluations in equity and bond markets. The Canadian dollar appreciated owing to a broad weakening of the US dollar.

Regarding the Canadian economy, Governing Council acknowledged a slowdown foreseen in 2025 due to tariffs on exports to the US and trade policy uncertainty impacting sentiment. Recent data indicated a deceleration in household spending and business investment.

Despite the steady recovery in the job market in late 2024, tensions dampened employment growth in early 2025. The inflation outlook showed CPI inflation at 2.3% in March, down from February but still above January levels.

The Council considered whether to maintain the policy interest rate or reduce it by 25 basis points. Some members favored holding the rate given recent rate cuts were still influencing the economy. Others suggested a rate cut to support economic activity amidst mounting concerns over a potential recession driven by recent tariffs and market instability.

Ultimately, due to the substantial uncertainty and evolving conditions, the Council decided to maintain the policy interest rate at 2.75%. They committed to continuing a robust engagement with surveys and assessing new data and policy announcements.

Governor Macklem summarized the consensus: the Council's approach will adapt to new information to navigate inflationary pressures resulting from demand shifts and increased costs. The policy would remain supportive of economy growth while focusing primarily on price stability.