Bank of Canada Governor Tiff Macklem has warned that escalating U.S. trade friction could inflict lasting damage on Canada’s economy, leaving households facing slower growth and reduced prosperity.
"What's most concerning is that unless we change some other things, our standard of living as a country, Canadians, is going to be lower than it otherwise would have been." said Macklem at a press conference, where the key interest rate was slashed to 2.25 percent amid economic contraction.
The Bank projects real GDP growth of 1.2 percent in 2025 and inflation remaining near 2 percent. Unemployment sits at 7.1 percent, while household debt remains close to 175 percent of disposable income, according to Statistics Canada.
The 2025 HungerCount, Food Banks Canada's annual national study of food bank usage (initiated in 1989), reveals a deepening food insecurity crisis in Canada. Based on data from over 5,500 food banks and community organizations, the report documents record-high demand, with monthly visits doubling since 2019 to nearly 2.2 million in March 2025—a 5.2% increase from 2024 alone.
The federal government is expected to post a budget deficit approaching C$100 billion for 2025-26, raising concern that sustained fiscal spending could keep inflation elevated even as growth weakens.
Eastern provinces face the sharpest strain, with Nova Scotia said to be the poorest jurisdiction in North America.
Macklem said the central bank will monitor global trade tensions closely and urged policy reforms to improve productivity and investment.