Bank of Canada Governor Tiff Macklem.

The Bank of Canada cut its benchmark interest rate by a quarter-point on Wednesday, lowering borrowing costs for the first time since March as U.S. tariffs continue to batter the Canadian economy.

As widely expected, the bank’s governing council voted to lower the policy rate to 2.5 per cent from 2.75 per cent. This follows three consecutive rate decisions where the central bank remained on hold.

The bank has been reluctant to ease monetary policy amid a trade war with the United States, given the possibility that U.S. tariffs and Canadian counter-tariffs could push up consumer prices and reignite inflation. But that calculus has shifted as unemployment has risen, exports have plummeted and inflation has remained relatively benign.

“Considerable un

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