07:35 AM EDT, 03/11/2025 (MT Newswires) -- S&P Global Ratings said it anticipates the Bank of Canada will lower interest rates by 25bps this week, bringing the rate down to 2.75%.

This follows a substantial 200bps reduction in overnight rates since the Canadian central bank began its monetary policy normalization last June.

The BoC is slated to release its policy statement on Wednesday at 9:45 a.m. ET.

Economic activity has positively responded to last year's aggressive monetary policy easing, with cuts spurring growth -- evident in Q4 gross domestic product, driven by increased household spending and housing activity, noted S&P Global.

In addition, business investment rebounded strongly in Q4, signaling optimism for the economy.

However, rising uncertainty surrounding United States trade tariffs and declining immigration growth may hinder population growth, posing challenges for domestic demand and the labor market, it added.

S&P Global expects the BoC to maintain its policy easing stance to offset some of the shocks from tariffs, while the inflation rate remains benign and within the central bank's 2% target.

However, the onset of new tariffs, which are likely to be imposed in some form in the coming weeks, will drag economic growth down and spike inflation by close to 50bps from S&P Global's earlier baseline.

S&P Global sees the Canadian dollar CAD or loonie) weakening by another 10% against the US dollar, with further downside risk as the central bank cuts rates to accommodate a weakening economy.