Bank of Canada's Macklem: We will do as much as we can to help adjust to tariffs

Macklem is sounding dovish but also restrained given inflationary impacts from tariffs.

• What we can do is limited by the need to control inflation
• We can't lean against weaker growth and higher inflation at the same time
• Tariffs are going to weaken the Canadian economy

Here is TD on the Bank of Canada decision:

"As long as the pressure on tariffs remains in place, the BoC should keep its dovish bias. We have the overnight rate getting to 2.25% by June, but see limitations in going further due to the delicate balance in managing inflation expectations."

BMO:

"Our core assumption is that Canada will be facing some serious tariffs for an extended period of time and that the growth dampening aspects of the trade war will ultimately outweigh the upside inflationary impact, keeping the Bank in easing mode"

USD/CAD is down 20 pips to 1.4412 as the market focuses more on tariffs and the risk trade. US stocks have just turned negative, giving back a huge gain.