It's two decisions in a row with a rate from the Bank of Canada. After a 25 basis point cut in September the Bank of Canada announced an additional 25 basis point decrease. Today's rate decrease brings the Bank of Canada policy rate to 2.25%.
Governor of the Bank of Canada Tiff Macklem, said he the bank had four main messages.
"First, US tariffs and trade uncertainty have weakened the Canadian economy. We expect very modest growth through the rest of the year, with some pickup in 2026.
Second, while this weakness is restraining price increases, the trade conflict is also adding costs for many businesses, putting upward pressure on inflation. We expect these opposing forces to roughly offset, keeping inflation close to the 2% target.
Third, to support the economy through this period of adjustment, we have lowered our policy rate by 50 basis points over our last two meetings and by 100 basis points since the start of the year.
And finally, the weakness we’re seeing in the Canadian economy is more than a cyclical downturn. It is also a structural transition. The US trade conflict has diminished Canada’s economic prospects. The structural damage caused by tariffs is reducing our productive capacity and adding costs. This limits the ability of monetary policy to boost demand while maintaining low inflation." (Bank of Canada, 2025)
Macklem also discussed the on going trade issues. "US trade policy remains unpredictable, as events over the weekend reminded us. There continues to be considerable uncertainty, both about US tariffs and their impacts. The range of possible outcomes is wider than usual—we need to be humble about our forecast. If the outlook changes, we are prepared to respond." (Bank of Canada, 2025)
The Bank of Canada's next rate announcement is scheduled for Wednesday, December 10, 2025., the final decision for 2025.
Graph Courtesy: Bank of Canada; https://www.bankofcanada.ca/core-functions/monetary-policy/key-interest-rate/
Quotes Courtesy: Bank of Canada; https://www.bankofcanada.ca/2025/10/opening-statement-2025-10-29/
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