Ottawa — The Bank of Canada has lowered its benchmark interest rate to 2.5%, marking a significant shift in monetary policy aimed at supporting growth amid signs of economic slowdown.
The rate cut, announced after the central bank’s policy meeting, is intended to ease borrowing costs for households and businesses as inflation trends closer to target and concerns about weakening demand intensify. Officials said the move reflects growing pressure from both domestic and global uncertainties, including trade disruptions and slowing consumer spending.
“With inflation easing and risks to growth increasing, the Governing Council judged it appropriate to provide additional stimulus to the economy,” the Bank said in its statement.
Economists note that the decision could help boost housing activity and business investment, though it also raises questions about how quickly the Bank may need to act if inflationary pressures return. The cut brings rates down from 2.75%, the level set earlier this year.
For Canadians, the impact will be felt most directly in mortgage rates, personal loans, and business financing. Analysts suggest the move may provide short-term relief but caution that challenges such as labour market softening and global trade tensions will continue to weigh on the economic outlook.
The Bank of Canada signaled that it will closely monitor inflation trends and economic conditions before deciding on any further moves, keeping the door open to additional cuts if needed.