The Bank of Canada reports that the key interest rate is now 2.25 percent after a quarter-point decrease.
Governor Tiff Macklem said the move is meant to support the economy while keeping inflation near the two per cent target.
“With this cut and based on this outlook, we think the current policy rate is about right.
But we recognize there’s a lot of uncertainty out there. And if … the outlook changes … we’re prepared to respond,” Macklem said.
He said household spending and housing are expected to remain resilient.
“By lowering interest rates, we are providing a bit more support to consumption and housing.
So we expect that they will continue to contribute to growth. Government spending is also contributing to growth in our forecast,” he said.
Macklem also pointed to the limits of monetary policy in the face of U.S. tariffs.
“Monetary policy can help the economy adjust as long as inflation is well controlled. But it cannot restore the economy to its pre‑tariff path,” he said.
Senior Deputy Governor Carolyn Rogers said the Bank’s plan to normalize its balance sheet remains unchanged.
“Our plan hasn’t changed, and if it does, we’ll provide advance notice,” Rogers said.
The Bank’s latest Monetary Policy Report projects weak growth through the rest of this year, with GDP expected to expand by 0.5 per cent in the third quarter and one per cent in the fourth.
Growth is forecast to pick up gradually in 2026 and 2027 as exports and business investment recover.
Inflation was 2.4 per cent in September, slightly higher than expected. Core inflation measures remain close to three per cent but are showing signs of easing.
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