Bank of Canada Cuts Rates Amid Economic Concerns

The Bank of Canada has reduced its key overnight rate by 50 basis points to 3.25%, marking its second consecutive large cut and fifth straight reduction overall. This decision aims to stimulate growth amidst economic slowdown signs, such as rising unemployment to 6.8% and GDP growth falling short of projections. Despite inflation reaching the target of 2%, the Bank acknowledges ongoing economic uncertainties, including potential U.S. tariffs under President-elect Trump and adjustments in global financial conditions. Governor Tiff Macklem noted that further cuts would be more gradual, signaling a cautious approach moving forward. The rate adjustment has contributed to the Canadian dollar's depreciation against the U.S. dollar, raising concerns about import prices. This decision is part of a global trend of easing monetary policies across major economies to balance growth and inflation.