Bank of Canada lowers interest rate to 2.5%

18-Sep-2025

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The Bank of Canada lowered its key interest rate by 25 basis points to 2.5 per cent on September 17, marking its first cut since March, as the central bank moves to stimulate a weakened economy.

The job market has softened, inflation excluding gas has eased, and the federal government's removal of retaliatory tariffs against the U.S. has reduced some "upside risk" to future inflation, governor Tiff Macklem noted in his opening remarks during a news conference in Ottawa.

"Considerable uncertainty remains. But with a weaker economy and less upside risk to inflation, Governing Council judged that a reduction in the policy rate was appropriate to better balance the risks going forward," he said.

"The Canadian economy is being affected by both U.S. tariffs and the unpredictability of U.S. trade policy," Macklem said.