Bank of Canada slashes key interest rate to 2.5%

The Bank of Canada announced on Wednesday that it has lowered its key interest rate by 25 basis points to 2.5 per cent.

This is the first cut to interest rates by the central bank since March.

The bank had kept the policy rate at 2.75 per cent for three consecutive meetings, citing high uncertainty around U.S. President Donald Trump’s tariffs and ongoing inflation pressures.

But now, with unemployment on the rise and economic activity contracting, some economists have been calling on the bank to resume adding support to the economy.

Inflation data released Tuesday also showed that prices rose by less than expected, further supporting the argument for a cut.

“With the labour market deteriorating, economic weakness in trade-exposed sectors spreading, and inflation well-containe