The Bank of Canada cut its benchmark interest rate by a quarter-point on Wednesday, lowering borrowing costs for the first time since March as U.S. tariffs continue to batter the Canadian economy.

As widely expected, the bank’s governing council voted to lower the policy rate to 2.5 per cent from 2.75 per cent. This follows three consecutive rate decisions where the central bank remained on hold.

The bank has been reluctant to ease monetary policy amid a trade war with the United States, given the possibility that U.S. tariffs and Canadian counter-tariffs could push up consumer prices and reignite inflation. But that calculus has shifted as unemployment has risen, exports have plummeted and inflation has remained relatively benign.

“Considerable uncertainty remains. But with a weaker economy and less upside risk to inflation, governing council judged that a reduction in the policy rate was appropriate to better balance the risks going forward,” said Bank of Canada Governor Tiff Macklem, according to prepared remarks.

Mr. Macklem said there was a “clear consensus” for a cut on Wednesday. But he gave few hints about where interest rates will go from here, saying that the bank would “look over a shorter horizon than usual, and be ready to respond to new information.”