Bank of Canada Cuts Key Interest Rate to 3.25%

The Bank of Canada has cut its key interest rate by 50 basis points to 3.25%, marking its fifth consecutive reduction since June. Governor Tiff Macklem stated that the decision reflects an easing of restrictive monetary policy as inflation and economic growth no longer require such measures. The Bank noted a decline in GDP growth and a slight increase in the unemployment rate, with potential tariffs from the incoming U.S. administration creating further economic uncertainty. While inflation is now aligned with the Bank's 2% target, Macklem emphasized the need for a more gradual approach to future cuts. The central bank will assess the economic landscape one decision at a time, indicating a cautious stance moving forward. The recent cuts are the first of their kind since the pandemic and highlight the Bank's shift from aggressive easing to a more measured monetary policy.