Bank of Canada Announces Interest Rate Cut
(MENAFN) The Bank of Canada on Wednesday reduced its benchmark interest rate by 25 basis points to 2.25 percent, citing persistent economic weakness tied to trade disputes with the United States.
“The structural damage caused by tariffs is reducing our productive capacity and adding costs,” Bank of Canada Governor Tiff Macklem said at a press conference, highlighting the toll of the ongoing trade conflict on the nation’s economy.
The central bank reported that Canada’s economy shrank 1.6 percent in the second quarter, driven by declining exports and soft business investment amid heightened uncertainty. U.S. trade measures have particularly hit the auto, steel, aluminum, and lumber industries, prompting the Bank of Canada to forecast sluggish economic growth for the remainder of the year.
Looking ahead, the bank expects inflationary pressures to moderate, keeping inflation close to the 2-percent target. Economic growth projections stand at 1.2 percent in 2025, 1.1 percent in 2026, and 1.6 percent in 2027.
This move marks the third rate cut by the Bank of Canada in 2025, following 25-basis-point reductions in March and September, after holding rates steady during meetings in April, June, and July.
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