Bank of Canada trims key interest rate, hints at end to cuts
Update: 2025-10-29
Description
The Bank of Canada has lowered its key interest rate to 2.25%, marking the second consecutive cut, in an effort to help the Canadian economy navigate disruptions from US tariffs while maintaining inflation at around 2%. Despite initial growth forecasts of 1.8% for 2025 and 2026, these have been revised down to 1.2% and 1.1% respectively due to changes in US trade policy. The bank suggests this could be the last rate cut for a while, unless inflation or the economy significantly changes. Canada's economy shrank by 1.6% in Q2, but may avoid further contraction in Q3 with predicted 0.5% annualized growth. Inflation is expected to average 2% this year, staying within the bank's target range. The Canadian dollar strengthened after the announcement, and investors don't anticipate further rate cuts until at least March 2024.
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