OTTAWA — The Bank of Canada faces a tough choice this week: cut rates to support a slowing economy or hold them at current levels to contain inflation. Economists are calling the situation “mission impossible.”

Inflationary pressures are mounting, but a recession is looming due to tariff instability, according to Andrew DiCapua, chief economist at the Canadian Chamber of Commerce. Many companies have suspended investment and hiring in anticipation of the impact of new trade restrictions, including the U.S. president’s announced hike in steel and aluminum tariffs.

After seven consecutive rate cuts, the Bank of Canada’s key rate is now at 2.75%. Most experts expect it to remain unchanged in June. However, some say a cut may be needed as early as July.

While GDP grew 2.2% in the first quarter, helped by stronger deliveries ahead of the tariffs, “weaker months” are ahead, according to Bank Governor Tiff Macklem. Manufacturing output fell by 31,000 jobs in April, and unemployment rose to 6.9%.

Some analysts believe that June is the time for an “insurance” rate cut, otherwise consumers and businesses may begin to cut spending even more.