November 12, 2025
RED FM News Desk
The Bank of Canada’s governing council was united on the need to lower its benchmark interest rate last month, but split on when to move, newly released deliberations show.
The summary, published Wednesday, outlines discussions leading to the central bank’s decision two weeks ago to trim its key rate by a quarter of a percentage point to 2.25 per cent — its second consecutive cut.
Council members agreed the reduction was justified as a sluggish economy, weighed down by U.S. tariffs, was expected to keep inflation close to the bank’s two per cent target.
Some argued for waiting until after the federal budget and more data on trade impacts, while others pushed for immediate action amid a soft labour market and muted growth expectations.
The governing council concluded that further rate cuts would likely be unnecessary if the economy evolves as projected.
The bank now forecasts modest growth of 0.75 per cent in the second half of the year, after a 1.6 per cent annualized contraction in the second quarter, driven by recovering consumer spending and housing activity.
Governor Tiff Macklem told MPs last week that monetary policy can only play a limited role in offsetting tariff-related weakness, saying fiscal policy must carry much of the load.
He added that while large deficits can fuel inflation in a hot economy, Canada’s current weakness means that risk remains low.
The Bank of Canada’s next interest rate decision is scheduled for Dec. 10.
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