All eyes are on the Bank of Canada ahead of its September 17 interest rate announcement, with economists widely expecting a long-awaited cut that could ease pressure on households and businesses.
Weak jobs data, rising costs from tariffs, and slowing economic momentum have strengthened the case for a 25-basis-point reduction, according to Ratehub.ca’s Penelope Graham. Canada’s unemployment rate hit 7.1 per cent in August, raising concerns that stimulus may be needed to keep Canadians working and the economy from stalling.
Premier Doug Ford has also been vocal about the need for a rate cut, criticizing the bank’s decision to hold firm in July despite growing economic uncertainty. “It’s never been more important to stimulate economic growth and keep Canadians working,” Ford said earlier this summer.
Economists at Scotiabank and CIBC now forecast two rate cuts before the end of the year, potentially bringing the overnight rate to 2.25 per cent by the fourth quarter. However, the Bank of Canada must balance rate relief with stubbornly elevated core inflation, which is expected to rise to 3 per cent year-over-year when Statistics Canada releases August data on September 16 — just one day before the rate decision.
With tariffs pushing up producer prices and gasoline costs climbing, the upcoming announcement could signal the start of an aggressive easing cycle to help Canadians weather an increasingly fragile economy.