Bank of Canada Cuts Rate to 2.50% as Macklem Cites Weaker Economy and Lower Inflation Risks

10:19 AM EDT, 09/17/2025 (MT Newswires) -- Bank of Canada Governor Tiff Macklem said Wednesday the Governing Council cut its policy interest rate by 25 basis points to 2.50%, citing a weaker economy and easing inflation pressures.

The remarks came in an opening statement for his press conference, scheduled to begin at 10:30 a.m. ET and published on the central bank's website.

Macklem said three developments since the July decision to hold rates have shifted the balance of risks.

First, Canada's labor market has softened further. Second, while some data remain mixed, overall evidence points to diminished upward pressure on underlying inflation.

Third, Canada's removal of most retaliatory tariffs on U.S. goods reduces upside risk to future inflation.

Considerable uncertainty remains, pointed out the governor. But with a weaker economy and less upside risk to inflation, the Governing Council judged that a reduction in the policy rate was "appropriate to better balance" the risks going forward.

The BoC will continue to assess risks on a shorter-than-usual horizon and stands ready to respond to new information, he added.

While U.S. tariffs have stabilized in recent weeks, attention is turning to the upcoming review of the Canada-United States-Mexico Agreement, and new U.S. threats to use tariffs as geopolitical leverage are adding to global uncertainty, according to Macklem.

He said there was a "clear" consensus on the Governing Council to lower the policy rate for the first time since March and that officials will keep evaluating how tariffs and trade-related uncertainty affect economic activity and inflation.

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