The Globe and Mail reports in its Monday, Jan. 27, edition that the Bank of Canada is expected to cut interest rates this week amid concerns of a potential trade war with the United States, which could lead to a recession and higher consumer prices. The Globe's Mark Rendell writes that tariffs from the U.S. can slow economic growth and raise unemployment, typically warranting lower interest rates. However, countertariffs and a weaker Canadian dollar could drive up prices, suggesting the need for tighter monetary policy. Economists refer to this challenging scenario as "stagflation." Analysts expect the bank to prioritize the downside risks of tariffs to economic growth, investment and jobs in its upcoming rate decision. Interest-rate swap markets indicate a 95-per-cent chance of a quarter-point cut, marking the bank's sixth consecutive reduction, lowering the benchmark rate to 3 per cent. Despite this, The Globe says Governor Tiff Macklem and the governing council face a complex decision this week. A rate cut would widen the gap between the BOC and the U.S. Federal Reserve, which is likely to stay on hold this month. This divergence could lead to a further depreciation of the Canadian dollar.