Bank of Canada says ‘weaker’ economy led to September rate cut

A weakening economy and the removal of most retaliatory tariffs helped convince the Bank of Canada that a cut to its key policy rate was warranted.

The Bank of Canada released its summary of deliberations on Wednesday from the meeting ahead of its Sept. 17 decision to cut its benchmark rate by a quarter-percentage point to 2.5 per cent.

The central bank said it considered holding the rate steady but there were three determining factors in favour of a lower rate. Those were a weakening economy with a softening labour market, signs that pressure on core inflation could be easing and the removal of most retaliatory tariffs by the federal government.

“In reviewing all these factors, governing council judged that the balance of risks had shifted in favour of cutting the policy rate.