Bank of Canada Cuts Key Interest Rate Again, Lowering it to 2.25%

The Bank of Canada has once again lowered its key interest rate — this time by 25 basis points, bringing the benchmark rate down to 2.25%.

This marks the second consecutive rate cut in just two months, a clear signal that the central bank is prioritizing economic support amid slowing growth and ongoing global trade tensions.

Why the Cut Matters

Despite a recent uptick in inflation and surprisingly strong job numbers, the Bank of Canada noted that “the impacts of U.S. tariffs are more evident,” and that Canada’s economy is still adjusting to significant global and structural changes.

The BoC stated that the current rate is now “about the right level” to maintain inflation near its 2% target while helping the economy find its footing.

In its Monetary Policy Report, the Bank projects steady inflation around 2% and expects GDP growth to gradually strengthen through the rest of the year, averaging about 1.4%. However, it also cautioned that U.S. tariffs are expected to permanently lower Canada’s overall GDP compared to earlier forecasts.

What This Means for You

For homeowners and potential buyers, this second rate cut could spell welcome relief. Lower borrowing costs mean potential savings on variable-rate mortgages, home equity lines of credit (HELOCs), and new home loans.

If you’ve been considering refinancing or locking in a lower rate, now may be the time to explore your options. As the Bank of Canada aims to keep inflation stable and the economy supported, the current environment could open doors for better affordability in the housing market.

Looking Ahead

Stay tuned! The next Bank of Canada interest rate announcement is scheduled for December 10, 2025.

Yahoo Finance

October 29, 2025