Bank of Canada plans sixth consecutive interest rate cut

The Bank of Canada is expected to announce a quarter-point interest rate cut on January 29, 2025, reducing the rate to 3.0%. This cut would be the sixth consecutive reduction, following previous cuts in October and December 2024, amid stabilizing inflation rates which fell to 1.8%. Economists suggest that the decline in inflation, spurred by the federal government’s temporary GST tax break, has created room for this adjustment. However, potential threats from U.S. tariffs pose concerns, as U.S. President Donald Trump has indicated a 25% tariff on Canadian goods could be implemented soon. The move aims to stimulate economic growth and make housing more affordable for Canadians. Overall, while the rate cut is anticipated, managing the balance between stimulating growth and controlling inflation remains a challenge for the Bank of Canada.