Bank of Canada Cuts Rate by 25bps

2025-03-12 13:54 By Andre Joaquim 1 min. read

The Bank of Canada cut its key interest rate by 25bps to 2.75% in its March decision, as expected and previously signaled, to mark 225bps in rate cuts since the start of its loosening cycle in June 2024.

The Governing Council noted that the Canadian economy grew more than expected in the fourth quarter with support from the past cuts in the policy rate, but growth is expected to slow at the turn of the year due to increasing trade conflict with the United States.

The bank also noted that the continuously changing tariff threats from the US hurt gauges of consumer confidence and investment expectations, which are expected to erase the strong economic activity triggered by firms attempting to undercut trade barriers.

In the meantime, the end of tax credits are expected to drive incoming inflation gauges to accelerate toward 2.5% after headline inflation remained below the 2% target for multiple months, but core gauges are set to gradually slow amid an expected ease in shelter inflation.



News Stream
Canada Leaves Interest Rate Steady
The Bank of Canada left its overnight target rate steady at 2.25% in its March 2026 meeting, aligned with market expectations and its earlier guidance, and noted that the current policy remains appropriate given the Bank's baseline economic outlook. Still, the war in the Middle East has increased volatility in global energy prices and heightened risks to the global economy to drive the Governing Council to warn of uncertainty, potentially warranting an adjustment in monetary policy in either direction. The central bank acknowledged that near term economic growth will be weaker than anticipated in January, with the Canadian GDP having contracted 0.6% in the fourth quarter of last year. Additionally, CPI inflation is expected to rise in the coming months as trade related cost pressures and a sharp increase in global energy prices are offset by eased inflation of 1.8% in February.
2026-03-18
Bank of Canada Holds Rate as Expected
The Bank of Canada held its overnight target rate unchanged at 2.25% in its January 2026 meeting, aligned with market expectations and its earlier guidance, and noted that the current policy remains appropriate given the Bank's baseline economic outlook. Still, recent tariff threats from US President Trump reignited concerns of trade disruptions and drove the Governing Council to warn of uncertainty, potentially warranting a an adjustment in monetary policy in either direction. The central bank loosely maintained their economic projections from October's Monetary Policy Report, with the Canadian GDP expected to rise over 1% this year and 1.5% next year. Additionally, CPI inflation is expected to remain close to the 2% target as trade-related cost pressures are offset by excess supply in the aggregate.
2026-01-28
Bank of Canada Keeps Rate at 2.25%
The Bank of Canada held its target overnight rate at 2.25% in December 2025, keeping the Bank Rate at 2.50% and the deposit rate at 2.20% after signalling in October that the policy rate was about right. Growth surprised to the upside with GDP expanding 2.6% in the third quarter, while the labour market showed improvement as the unemployment rate fell to 6.5% in November. CPI inflation slowed to 2.2% in October and the Bank judges measures of core inflation remain in the 2.5% to 3% range with underlying inflation around 2.5%. Policymakers noted ongoing global uncertainty, tariff driven pressures and volatile trade which may continue to cause quarterly swings in GDP. If inflation and activity evolve broadly in line with the October projection the Governing Council sees the current policy rate about right to keep inflation close to 2% while helping the economy through this period of structural adjustment, but it stands ready to respond if the outlook changes.
2025-12-10