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Bank of Canada Cuts Interest Rate to 3% — The Lowest Since 2022!

Bank of Canada Cuts Interest Rate to 3% — The Lowest Since 2022!

Big news from the Bank of Canada! This Wednesday, they announced a 25-basis point rate cut, bringing the interest rate down to 3%. It’s the lowest the rate has been since September 2022. This is the first of eight rate cuts planned for 2025, and it shows the Bank is taking a slower, more gradual approach to policy after the bigger cuts in October and December.

With inflation hovering around 2% and the economy still adjusting, the Bank decided to reduce the rate further. The hope is that these lower rates will encourage household spending and gradually strengthen the economy. The Bank has made it clear that while things are looking good now, they’ll be keeping a close eye on the situation—especially with the looming threat of tariffs from the U.S.

Economists were pretty much expecting this 25-basis point cut, though things have been a bit uncertain lately, especially with the possible tariffs set to hit as early as February 1st. If the tariffs go through, it could shake things up for the Canadian economy, which is why some experts say the Bank was playing it safe with this decision.

Of course, the full impact of any U.S. tariffs is still up in the air. Some think the Bank may need to raise rates in the future if inflation picks up, while others believe the cuts could continue if the economy stays on track.

The next rate decision will happen on March 12, 2025, and we’ll be keeping a close eye on what happens next.

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