Bank of Canada Expected to Deliver Second Consecutive Rate Cut Amid Economic Slump

The Bank of Canada is widely expected to cut its interest rate by 25 basis points to 2.25% for the second consecutive time, aiming to support a sluggish economy impacted by U.S. tariffs and ongoing USMCA trade negotiations. Despite a recent slight rise in inflation, economists believe that slow economic growth will keep inflation in check, and this cut is likely the last for a while unless there is a major shock to trade relations. The rate cut is anticipated to provide some economic momentum by lowering borrowing costs and increasing liquidity for households and businesses, but further cuts may depend heavily on the outcome of trade talks. Meanwhile, in the U.S., the Federal Reserve is also expected to reduce rates by 25 basis points and possibly end its balance sheet reduction, responding to inflation data that showed a modest increase in consumer prices. These central bank moves reflect a cautious shift toward modest stimulus amid cooling inflation and fragile economic growth in North America. Investors are closely watching economic indicators, government bond auctions, and policy statements for further guidance on the future trajectory of monetary policy.