The gap in interest rate policies between Canada and the U.S. widened further as the Bank of Canada cut its key lending rate by a quarter-point on Wednesday, while the U.S. Federal Reserve held rates steady.

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The central bank’s interest rate currently sits at 3.25 per cent, the top-line of the bank’s neutral range. In December, Bank of Canada governor Tiff Macklem said policymakers would take a more “gradual approach” to reductions of the policy rate moving forward.

The Bank of Canada’s independence could be tested as Mark Carney, former governor of both the Bank of Canada and the Bank of England, is now running for leader of the Liberal Party.

The Bank of Canada outlined the possible impacts of an all-out trade war with the U.S. on Wednesday, which could end up having ramifications for Federal Reserve officials. One of the BoC's conclusions was that there could be slower economic growth and higher inflation in both the U.

That’s the prediction of Bank of America economists who think Canada’s central bank will cut 25 basis points on Jan. 29 and then hold its key rate at 3 per cent. “We expect the forward guidance to signal a pause as the BoC waits to see how both domestic activity and U.S. trade policy play out,” said the economists led by Carlos Capistran.

Gold hit a record high, with investors flocking to safe havens after US President Donald Trump reiterated threats to impose tariffs on Mexico and Canada.

ET, the Dow Jones Industrial Average rose 0.26 per cent, the S&P 500 gained 0.43 per cent, the Nasdaq Composite gained 0.82 per cent

U.S. Treasury yields were unchanged on Friday as investors parsed the latest inflation reading as well as other economic data. The 10-year Treasury yield was marginally lower at 4.508%, and the 2-year Treasury yield was fractionally higher at 4.

The FedWatch tool shows that the likelihood of further interest rate cuts during this week's FOMC meeting was almost zero per cent. President Trump demanded rate cuts and lower oil prices early this week,

Canada's main stock index opened higher on Wednesday as investors awaited interest rate verdicts and comments from the U.S. Federal Reserve and the Bank of Canada, due later in the session. At 9:31 a.