By Paul Vieira
OTTAWA--A senior Bank of Canada policymaker warned a possible trade row between the U.S. and Canada would be detrimental to economic growth in the country.
President-elect Donald Trump has pledged to slap a 25% tariff on all Canadian imports shortly after his inauguration on Monday, and Canadian officials have vowed to respond forcefully with retaliatory tariffs.
Deputy Gov. Toni Gravelle said Thursday, after a speech in Toronto focused on the central bank's balance sheet, that the Bank of Canada would release more analysis about the impact of a trade row when it issues its next interest-rate decision on Jan. 29.
Tariffs on Canadian exports "would have a big negative impact on economic growth," Gravelle said. Should Canada retaliate, as it has vowed, that's likely to push the cost of goods upward, he added.
"So there's likely to be an inflation impact at the same time that we have a slowdown in the economy. That puts a central bank in a very complicated space," Gravelle said.
The Bank of Canada sets interest rates to achieve and maintain 2% inflation. The central bank has cut its policy rate by 1.25 percentage points since June, to 3.25%, and is expected to reduce it further to help stimulate growth and absorb spare capacity.
Write to Paul Vieira at paul.vieira@wsj.com
(END) Dow Jones Newswires
01-16-25 1402ET
