BoC cuts rates by quarter point, says tariffs would test economy’s resilience
Bank of Canada governor Tiff Macklem speaks at the Greater Vancouver Board of Trade in Vancouver, B.C., Monday, Dec. 16, 2024. THE CANADIAN PRESS/Ethan Cairns
The Bank of Canada lowered interest rates by another quarter percentage point on Wednesday to help spur growth, marking the sixth consecutive cut amid worries about rising unemployment and slow growth.
The Ottawa-based central bank cut the overnight rate by 25 basis points to 3%, according to a statement on its website, and has now reduced borrowing costs by 2 percentage points since June, including two half point cuts in October and December.
However, there was no language in the statement around the prospect of further reductions.
“Setting aside threatened US tariffs, the upside and downside risks around the outlook are reasonably balanced,” policymakers led by Governor Tiff Macklem said in their decision statement.
The central bank said its economic projections don't reflect a possible trade conflict with the U.S., making them subject to “more-than-usual uncertainty.” It added “if broad-based and significant tariffs were imposed, the resilience of Canada’s economy would be tested. We will be following developments closely and assessing the implications for economic activity, inflation and monetary policy in Canada.”
The Bank of Canada also announced it would end its so-called quantitative tightening program, whereby it was shrinking a balance sheet that had inflated due to bond purchases during the pandemic.
