A need to fuel faster growth and shield the economy from U.S. trade-policy uncertainty led senior Bank of Canada officials to agree on a quarter-point rate cut last month, according to minutes summarizing central bank deliberations.

Bank of Canada officials decided to cut its benchmark interest rate by 25 basis points to 3% last month to better balance inflation risks, and support the economy in light of U.S. President Donald Trump's tariff threat as "the adverse impact on the level of GDP would be permanent."

U.S. President Donald Trump’s tariffs would push Canada’s economy into a recession and cause unemployment to surge, BMO’s chief economist said in a research note, likely pushing the Bank of Canada to cut its benchmark interest rate at its next six meetings through October.

The central bank released a summary of its deliberations today that describe a long discussion by the bank’s governing council on the risks that tariffs would bring to the economy

The Bank of Canada has appointed Michelle Alexopoulos to the central bank’s second outsider position, expanding its interest-rate setting council to seven.

Canada’s jobless rate has fallen for two consecutive months, as it dropped to 6.8 per cent in December from a recent peak of 6.9 per cent in November. Prior to that, the unemployment rate had been on a steady rise from a post-pandemic low of 4.6 per cent in July 2022.

Bank boss Andrew Bailey told the BBC it expected to cut rates further but warned the road ahead would be bumpy.

The Bank of Canada's governing council felt that a protracted trade conflict with the U.S. would permanently shrink the level of domestic GDP, the minutes of a policy decision meeting showed on Wednesday.