The Bank of Canada announced Wednesday that it is ending its quantitative tightening program and lowering interest rates by 25 basis points to 3%, marking another step in its efforts to support the economy.
The recent rebound in consumer spending and housing activity to persist, though business investment remains sluggish. The central bank projects the country's gross domestic product to pick up this year, forecasting 1.8% growth in both 2025 and 2026, outpacing its estimated potential growth rate. "Lower interest rates are boosting household spending and, in the outlook published today, the economy is expected to strengthen gradually and inflation to stay close to target," the central bank noted.
In its January Monetary Policy Report (MPR), the central bank cautioned that rising uncertainty, driven by a "rapidly evolving policy landscape," could pose economic risks, particularly the potential impact of trade tariffs under the new United States administration.
