12:12 PM EST, 01/29/2025 (MT Newswires) -- The Toronto Stock Exchange is up near 45 points, led by miners, up 2%.

Limiting gains are declines in utilities (-0.6%) and telecoms (-0.4%).

The Bank of Canada on Wednesday cut its key benchmark interest rate by 25 basis points, and removed rates guidance due to the threat of tariffs from the United States.

The BoC in its latest Monetary Policy Report, published at the same time as the rates decision was announced, said Canadian economic growth is forecast to average 1.8% this year and 2026. But market watcher Ed Devlin, on BNN TV said the Central Bank would be lucky to see 1% this year. The economic outlook presented in Wednesday's MPR doesn't incorporate any new U.S. tariffs on Canadian goods, although it recognizes that the threat of tariffs is already affecting financial markets and business decisions.

TD Economics in looking at the key implications of today's BoC update noted the slowdown in the pace of rate cuts was widely expected. It said this more conservative approach makes sense for an economy that churned out 91k jobs last month and is likely to see "solid" GDP growth for the fourth quarter of 2024 of around 2%. At the same time, TD added, inflation remains under control, allowing the BoC to focus on the state of the economy. According to TD, this approach also mitigates the risk that the policy rate diverges too much from the Fed (which is clearly on hold). The loonie remains under pressure, but seems to have stabilized at around 69 U.S. cents, it noted.

The economic outlook, TD added, has become "highly uncertain" with Donald Trump threatening to make an announcement on tariffs this Saturday. Canada exports $1.9 billion daily in goods and services south of the border. This sums to around 20% of Canada's economy, with nearly two million jobs dependent on U.S. trade. TD said: "We are still hopeful that tariff threats are more of a negotiation tactic, meaning they would be temporary and carry less long term impacts. Yet, this is a tail risk that remains front and center in the mind of the BoC. Our baseline forecasts remains that the BoC will cut rates to 2.25% by year-end, but should 25% tariffs come into play for more than a few months, we'd expect the central bank to cut more aggressively in order to cushion the economy."

According to David Rosenberg, investors should plan for a 63 cent (U.S.) Canadian dollar, a 1.5% policy rate, and a 2.5% yield on the 10-year GoC bond as the fallout from any 25% Trump-induced tariff on America's so-called 'friend' north of the border. Focus your TSX exposure on the "bonds in drag" (Banks, REITs, Communication Services, and Utilities) and the beneficiaries of a weaker dollar (Travel/Tourism) and avoid the areas most affected by the Trump trade action (Industrials, Materials, and consumer products), Rosenberg said.