Bank of Canada lowers key rate to 2.5 per cent

The Bank of Canada announced on Wednesday that it has lowered its key interest rate by 25 basis points to 2.5 per cent.

 

This is the first cut to interest rates by the central bank since March.

 

The bank had kept the policy rate at 2.75 per cent for three consecutive meetings, citing high uncertainty around U.S. President Donald Trump’s tariffs and ongoing inflation pressures.

 

But now, with unemployment on the rise and economic activity contracting, some economists have been calling on the bank to resume adding support to the economy.

 

Inflation data released Tuesday also showed that prices rose by less than expected, further supporting the argument for a cut.

 

“With the labour market deteriorating, economic weakness in trade-exposed sectors spreading, and inflation well-contained, a 25-basis-point rate reduction seems like the obvious course of action,” said Royce Mendes, head of macro strategy at Desjardins, in a note to clients on Tuesday.

 

The Bank of Canada’s announcement will be followed by a press conference with bank governor Tiff Macklem and senior deputy governor Carolyn Rogers at 10:30 a.m.

 

This is a developing story.

 

 

 

 

This article was first reported by The Star