The Bank of Canada is widely expected to announce another interest rate cut next week, even as inflation edged slightly higher in September.
The central bank’s next rate decision is scheduled for Wednesday, October 29, with economists predicting a further 25-basis-point reduction following the September cut — which brought the policy rate to 2.5 per cent. The Bank reviews interest rates eight times a year, influencing mortgage rates, loan costs, and overall borrowing conditions across the country.
According to Statistics Canada, inflation rose to 2.4 per cent in September, up from 1.9 per cent in August. While slightly above the Bank’s 2 per cent target, analysts say the economy remains soft enough to justify additional monetary easing.
“It is unlikely policymakers cut rates in September expecting that just one reduction would be sufficient,” said RBC economists Nathan Janzen and Abbey Xu. “We expect them to follow with another 25-basis-point cut later this month.”
TD Bank economists Thomas Feltmate and Andrew Hencic echoed that outlook, projecting the policy rate will fall to a neutral level of 2.25 per cent by year-end, where it is likely to remain as economic growth stabilizes.
Even with modest job gains reported in September, Bank of Canada Governor Tiff Macklem has left the door open for further cuts, saying future moves depend on economic data.
“Canadian core inflation measures remain good enough for the Bank of Canada to cut next week when properly evaluated in terms of month-over-month trends,” added Scotiabank’s Derek Holt, noting the central bank would need “strong arguments against a cut that I don’t think they have.”
The Bank’s final scheduled announcement of the year is set for December 10, leaving just two more opportunities in 2025 for policymakers to act.