Bank of Canada cuts rates by 25 basis points, as expected

(Sharecast News) - The Bank of Canada cut its key interest rate on Wednesday by 25 basis points to 2.25%, as widely expected. It said in a statement: "With ongoing weakness in the economy and inflation expected to remain close to the 2% target, Governing Council decided to cut the policy rate by 25 basis points.

"If inflation and economic activity evolve broadly in line with the October projection, Governing Council sees the current policy rate at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment. If the outlook changes, we are prepared to respond. Governing Council will be assessing incoming data carefully relative to the Bank's forecast."

The BoC is projecting GDP growth of 1.2% in 2025, 1.1% in 2026 and 1.6% in 2027. On a quarterly basis, growth is expected to strengthen in 2026 after a weak second half of this year.

It said excess capacity in the economy is expected to persist and be taken up gradually.