OTTAWA, Oct. 29 (Xinhua) -- The Bank of Canada on Wednesday lowered its benchmark interest rate by 25 basis points to 2.25 percent, citing ongoing economic weakness caused by trade conflicts with the United States.
The trade conflict with the United States has diminished Canada's economic prospects. "The structural damage caused by tariffs is reducing our productive capacity and adding costs," Bank of Canada Governor Tiff Macklem said at a press conference.
The central bank noted that the Canadian economy contracted by 1.6 percent in the second quarter, reflecting a drop in exports and weak business investment amid heightened uncertainty, adding that U.S. trade actions are severely affecting sectors such as auto, steel, aluminum and lumber, leading to a forecast of weak economic growth for the second half of the year.
The Bank projected that inflationary pressures will ease in the coming months, with inflation remaining near the 2-percent target. The economy is forecasted to grow by 1.2 percent in 2025, 1.1 percent in 2026, and 1.6 percent in 2027.
This marked the third rate cut by the Bank of Canada this year, following similar 25-basis-point reductions in March and September. The rate was held steady through meetings in April, June and July. ■