The Bank of Canada cut interest rates by 25 basis points as expected, while also hinting that it would pause rate cuts to protect the economy and control inflation.

The Bank of Canada cut its policy rate for the fourth time this year and hinted that it may keep rates unchanged for the foreseeable future to help the Canadian economy struggling under pressure from US tariffs. Bank of Canada Governor McClellan warned that the Canadian economy will experience weak growth in the future as the effects of US trade policies become more apparent. A weak labor market, continued weak business investment and exports, and this excessive weakness will persist until 2027. He added that the US tariffs of up to 50% on steel, aluminum, automobiles, and lumber have had a “serious impact” on key sectors of the economy. If the economy develops broadly in line with the outlook, the Governing Council believes that the current policy rate will help the economy through this period of structural adjustment while keeping inflation close to 2%. He added that interest rate policy can only do so much in curbing the damage caused by Trump's tariff policies. As long as inflation is well controlled, monetary policy can help the economy adjust, but it cannot put the economy back on the “track” before the tariffs. (Jinshi)