Bank of Canada lowers policy rate to 2.5 per cent

A cut to the Bank of Canada’s key interest rate.

It’s down 25 basis points to 2.5 per cent.

The rate held steady at 2.75 per cent the last three decisions, but a trend of slowing economic growth contributed to the cut.

Governor Tiff Macklem says three developments have shifted the balance of risk since July.

“First, Canada’s labour market has softened further. Second, although there are still some mixed signals, recent data suggests upward pressure on underlying inflation has diminished. Third, there’s less upside risk of future inflation with the removal of retaliatory tariffs,” said Macklem.

The bank adds that exports fell by 27 per cent in the second quarter, as many in the first quarter were trying to get orders out ahead of U.S. tariffs.

Macklem says they’ll continue to monitor how exports evolve in the changing global trade landscape.