The Bank of Canada lowered its key overnight rate by 0.25% to 2.5%, citing a slowing economy and fewer inflation risks.
📊 Why They Cut
Canada’s economy shrank 1.5% in Q2 – exports dropped sharply (-27%) as tariffs and trade uncertainty hit hard.
Employment is weakening – job losses in trade-sensitive sectors, unemployment at 7.1% (highest since March), slower wage growth.
Inflation is stable – August CPI at 1.9%, core inflation around 2.5% but losing momentum.
Government removed most retaliatory tariffs, reducing future price pressure.
🔮 What It Means
The Bank aims to support growth while keeping inflation near its 2% target.
Future rate decisions will depend on exports, business investment, jobs, and inflation trends.
Lower rates may ease borrowing costs for households and businesses, but global trade uncertainty remains a risk.
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