The Bank of Canada cut its key rate to 2.25% to support the economy, but warned monetary policy cannot undo the impact of US tariffs, which were recently raised by 10% on Canadian goods.
The Bank of Canada lowered its key interest rate to 2.25% on Wednesday, 29 October 2025, citing ongoing economic weakness, but emphasised that monetary policy cannot reverse the structural damage caused by the US trade war.
The central bank reduced rates by 25 basis points as inflation is expected to remain near its 2% target, while economic growth shows signs of strain.
“For many months, we have been stressing that monetary policy cannot undo the damage caused by tariffs,” said Bank of Canada governor Tiff Macklem during a news conference in Ottawa.
Earlier, US President Donald Trump announced on 26 October 2025 that he had raised tariffs on Canadian goods by an additional 10%, citing frustration over a controversial ad aired by Ontario’s government.
