Toronto 
The Bank of Canada has lowered its benchmark interest rate by 25 basis points to 2.25%, citing persistent economic weakness and global trade uncertainty. The Bank Rate now stands at 2.5%, while the deposit rate is 2.20%.
Credit: Bank of Canada
The central bank’s latest Monetary Policy Report projects slower global and domestic growth, citing persistent uncertainty stemming from U.S. trade policies. The Bank said while global growth has remained resilient despite U.S. tariffs, the effects are now becoming more visible as trade tensions continue to restrain investment.
In its forecast, global economic growth is expected to decline from around 3.25% in 2025 to 3% in 2026 and 2027. The U.S. economy remains strong due to artificial intelligence–driven investment, though employment growth has slowed and tariffs have increased consumer prices. The euro area faces weaker exports, while China’s exports to the U.S. have declined but found partial support from other markets.
Canada’s economy contracted by 1.6% in the second quarter, largely due to falling exports and business investment. Despite this, household spending has been resilient. The Bank expects GDP growth of 1.2% in 2025, 1.1% in 2026, and 1.6% in 2027, with gradual improvement as exports and investment recover.
Labour market conditions remain weak, with unemployment steady at 7.1% in September and slowing wage growth. The Bank also reported September CPI inflation at 2.4%, while core inflation stayed near 3%.
“The Canadian economy faces a difficult transition. The structural damage caused by the trade conflict reduces the capacity of the economy and adds costs,” reads the Bank of Canada’s statement.
“This limits the role that monetary policy can play to boost demand while maintaining low inflation. The Bank is focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval.”
The Governing Council stated the rate cut aims to support the economy while maintaining inflation close to its 2% target.
The next scheduled interest rate announcement is set for December 10, 2025.
