Wednesday September 17, 2025 | NATIONAL NEWS
by Mary P Brooke | Island Social Trends
Today the Bank of Canada used their one and only blunt tool — the setting of the policy interest rate — to show that they are finally catching up with what may have helped the economy earlier in the year.
The rate was dropped by 25 basis points today, to 2.5%. The Bank wants to maintain low stable inflation.
Real impacts:
At 2.5%, some variable rate borrowing will now be lower than the fixed rate for some borrowers and mortgage holders. But the impact on average households will likely be minimal; there should be little to no expectation of a lowering of interest rates charged by credit card companies.
About 85% of the homeowner mortgages that are up for renewal this year were taken out during the pandemic when interest rates were close to zero.
Cautious motion:
Caution is the way of the central bank, which for the most part is good for the Canadian way.
But finally dropping the rate by 0.25% — so deep into to the challenges of a trade-war economy — seems a bit behind schedule. A rate drop in April may have kickstarted some investment momentum for Canadian projects. A rate drop in June or July may have signaled more attentiveness to the mood of the country and offered some hope of a way forward.
Now that unemployment is clearly up and GDP is clearly not growing fast enough, now the bank has acted. As heard in today’s remarks by Bank of Canada Governor Tiff Macklem, it seems that the banks feels that inflation has been contained (their key goal since the pandemic-related inflation) .
“We are focused on ensuring that Canadians continue to have confidence in price stability through this period of global upheaval. We will support economic growth while ensuring inflation remains well controlled,” said Macklem today.
Facilitating growth:
Now the Bank seeks to facilitate growth, a comment delivered with some enthusiasm by the Bank today in their media session.
Today in Question Period in the House of Commons, Prime Minister Mark Carney said that Canada’s interest rate is lower than in the United States because Canada wants to “grow the economy”.
Two more rate announcements remain in 2025, scheduled for October 29 and December 10.
===== RELATED:
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- Bank of Canada holds key interest rate at 2.75% as US tariff deadline looms (July 30, 2025)
- June 4: Bank of Canada holds interest rate at 2.75% (June 4, 2025)
- Trump’s economic warfare against Canada & realignment toward Russia (March 3, 2025)
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