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Special Report

Canada Monetary Policy Research Brief

January 2025

Growing Momentum Prompts Central Bank to
Return to a More Gradual Pace of Easing

Central bank moves as expected. The Bank of Canada cut its policy rate by 25 basis points in January, bringing it to 3.0 per cent. The central bank cited soft labour market conditions, at-target inflation and an economy operating in excess supply as its main reasons for undertaking additional easing efforts. The BoC did note, however, that past rate cuts are beginning to boost economic activity. The recent strengthening in consumption and housing is likely to continue, while new capacity in the oil and gas sector amid the opening of the Trans Mountain pipeline could support exports. Anticipating economic growth will come in slightly above potential, the central bank returned to a more gradual pace of easing.

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