BoC cuts key rate by quarter point to 3% as tariffs threat loom

By Canadian Press on January 29, 2025.

OTTAWA — The Bank of Canada delivered another interest rate cut today, reducing its policy rate by a quarter-percentage point to three per cent.

It’s the central bank’s sixth straight cut since June, with inflation sitting around two per cent.

It says the cuts are having an impact, with lower interest rates boosting household spending and the economy expected to strengthen.

But the threat of U.S. tariffs is creating uncertainty for the Bank of Canada’s economic outlook.

The central bank revised down its GDP growth projections to 1.8 per cent for 2025 and 2026, factoring in lower population growth and a downward revision to business investment from increasing policy uncertainty.

Governor Tiff Macklem said even if tariffs hit, it’s hard to predict their impact given the unprecedented magnitude and uncertain scope of retaliatory measures.

This report by The Canadian Press was first published Jan. 29, 2025.

Nick Murray, The Canadian Press