The Bank of Canada on Wednesday trimmed its key policy rate by 25 basis points to 3%, cut growth forecasts and said it was concerned that U.S. tariffs could stoke persistently high inflation. U.S. President Donald Trump is promising to impose a 25% tariff on all imports from Canada on Saturday.

The potential for U.S. tariffs is clouding the economic outlook for the Bank of Canada as it delivered another interest rate cut, reducing its policy rate by a quarter-percentage point to three per cent.

The Bank of Canada cut its interest rate by 25 basis points to three per cent Wednesday, warning that a potential trade war with the U.S. could stunt economic growth over the next few years. Bank of Canada governor Tiff Macklem noted in his opening remarks that while inflation has held near the bank’s two per cent target since August and household spending is picking up,

The Bank of Canada on Wednesday trimmed its key policy rate by 25 basis points to 3%, cut growth forecasts and warned Canadians that a tariff war triggered by the United States could cause major economic damage.