Bank of Canada Policy Announcement (Oct. 2025)

With the Bank of Canada’s decision to cut today widely anticipated, the key development was that it signalled that it now thinks the policy rate is “at about the right level to keep inflation close to 2% while helping the economy through this period of structural adjustment”. That is a sure sign that it is likely to keep interest rates unchanged in December, as we anticipate, although we still think the Bank will eventually be forced to cut interest rates by another 50bp next year.