The Bank of Canada lowered interest rates by 50 basis points today, Wednesday, in a move that marks the fifth consecutive cut, amid signs of a slowdown in the country's economic growth.

Reasons for the decision:

• Economic growth: The Canadian economy grew by only 1% in the third quarter of 2024, with expectations of weaker performance in the fourth quarter.

• Unemployment: The unemployment rate rose to 6.8% in November, with the number of job seekers increasing at a faster pace than job growth, particularly affecting youth and newcomers.

• Monetary policy: Bank Governor Tiff Macklem stated that monetary policy “no longer needs to be clearly in a restrictive zone,” noting that the rate cut has contributed to reviving consumer spending and activity in the housing market.

Additional factors:

• Demographic changes: A slowdown in population growth due to shifts in immigration policy, which may lead to an additional rise in unemployment in the coming months.

• Trade tensions: The bank cited concerns related to the upcoming U.S. administration and the possibility of a 25% tariff on Canadian exports, which adds to economic uncertainty.

Future outlook:

The Bank of Canada expects inflation to remain close to its 2% target over the next two years, despite current economic challenges.

Attention remains focused on future developments in monetary and trade policy and their impact on the Canadian economy.