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# Bank of Canada cuts overnight rate by 25 basis points to 2.50% after three consecutive holds
- URL: https://www.theglobalbanker.com/bank-of-canada-cuts-overnight-rate-by-25-basis-points-to-2-50-after-three-consecutive-hold/
- Published: 2025-09-17T14:00:00.000Z
- Updated: 2026-10-27T08:43:49.000Z
- Description: The Bank of Canada resumed easing for the first time since March, citing a weaker economy, job losses and less upside risk to inflation.
- Author: TGB Editorial Team
- Tags: Central Banks, Americas, #archive

The Bank of Canada lowered its target for the overnight rate by 25 basis points to 2.50% on 17 September 2025, with the Bank Rate at 2.75% and the deposit rate at 2.45%. It was the first cut since March 2025, after the Bank held the rate at 2.75% in April, June and July.

Governing Council said that with a weaker economy and less upside risk to inflation, a reduction in the policy rate was appropriate. The move lowers the policy rate from 2.75%, the level at which it had stood since March, as tariffs and trade disruption continued to weigh on Canadian economic activity.

#### WEAKER ECONOMY

Canada's GDP declined by about 1.5% in the second quarter, as exports fell by 27% amid tariffs and trade disruption. Business investment also declined, while consumption and housing activity grew at healthy rates.

Employment declined in the previous two months, with job losses concentrated in trade-sensitive sectors, and the unemployment rate rose to 7.1% in August. Wage growth eased, and the Bank said weakness in the labour market was likely to weigh on household spending.

#### INFLATION PICTURE

CPI inflation was 1.9% in August, or 2.4% excluding taxes. The Bank's preferred core inflation measures had been around 3% in recent months, although the monthly upward momentum seen earlier in the year had dissipated, and a broader range of indicators suggested underlying inflation of around 2.5%.

The Bank said the federal government's decision to remove most retaliatory tariffs on imported goods from the United States would mean less upward pressure on prices of those goods. Its next scheduled rate announcement is on 29 October 2025, alongside the October Monetary Policy Report.