Bank of Canada cuts rate to 2.5% as tariffs and weak hiring hit economy
The Bank of Canada lowered its overnight rate to 2.5% on Wednesday, responding to mounting economic damage from US tariffs and a slowdown in hiring. The quarter-point cut was the first since March and met predictions from markets and economists.
Governor Tiff Macklem, speaking in Ottawa, said the decision was unanimous. “With a weaker economy and less upside risk to inflation, Governing Council judged that a reduction in the policy rate was appropriate to better balance the risks going forward,” Tiff said.
He confirmed there was “clear consensus” among policymakers to move ahead with easing, but refused to give any signals on future cuts.
The central bank is reacting to worsening labor market data and a noticeable drop in exports and investment. Policymakers reported that Canada lost more than 106,000 jobs in July and August, mostly in sectors sensitive to global trade.
Hiring has also slowed elsewhere. Unemployment now stands at 7.1%. Officials said these conditions—combined with the effects of US trade policy—created the need for rate relief.
Bank holds back forward guidance, watches trade and inflation mix
Tiff didn’t offer guidance about what happens next, walking back language from the July meeting that had left the door open to more cuts. He explained the bank would be “proceeding carefully,” and warned that “the disruptive effects of shifts in trade will continue to add to costs even as they weigh on economic activity.”
The economy shrank by 1.6% on an annualized basis in the second quarter, matching the bank’s expectations. The decline came mostly from reduced exports and weak business investment. Tiff said consumption and housing were still holding up, but warned that “slow population growth and labor market weakness” could soon hit household spending.
On tariffs, Tiff was direct: “Tariffs are having a profound effect on several key sectors, including the auto, steel, and aluminum sectors.” He also mentioned that Prime Minister Mark Carney had recently removed retaliatory tariffs on certain US goods, which took away one possible driver of inflation. But the central bank doesn’t believe that’s enough to undo the broader hit coming from global protectionism.
The bank’s preferred core inflation measures—the trim and median indexes—are running close to 3%, but Tiff said upward momentum in those numbers has “dissipated.” Wage growth is also cooling. “Recent data suggest the upward pressures on underlying inflation have diminished,” he added. The bank now sees underlying inflation trending closer to 2.5%.
No word on money market stress as Canada joins EU defense talks
Despite volatility in money markets, the Bank of Canada avoided mentioning funding pressures, even though the Canadian Overnight Repo Rate Average (Corra) has traded 5 basis points above the policy rate through most of September. The deposit rate was set at 2.45%, which remains 5 basis points under the target rate.
At the same time, Canada is deepening military ties with Europe. The European Union gave the go-ahead on Wednesday to begin negotiations with both Canada and the UK for access to the EU’s €150 billion SAFE fund, meant to boost defense investment. The news came from the European Council, which is currently led by Denmark.
If approved, the deal will let Canadian companies take part in joint defense procurements funded by SAFE (Security Action for Europe). This move would expand existing security partnerships between Canada and the EU. The SAFE fund was launched after Russia’s 2022 invasion of Ukraine and aims to strengthen Europe’s defense posture, especially with concerns about President Donald Trump’s stance on NATO.
Right now, only companies from EU nations have full access, though Ukraine gets special treatment. Other non-EU nations, including Albania, Turkey, and South Korea, are also trying to join. Albania’s Prime Minister Edi Rama met with NATO Secretary General Mark Rutte in Brussels on Wednesday to discuss participation.
Want your project in front of crypto’s top minds? Feature it in our next industry report, where data meets impact.
You May Also Like
Flora Growth Announces $401M Funding to Boost AI Zero Gravity (0G) Coin Treasury
Highlights: Flora Growth announces $401M PIPE financing round aimed at establishing an AI Zero Gravity (0G) coin treasury. DeFi Development Corp. led the fundraising exercise with strong support from other companies. Flora Growth will rebrand to ZeroStack following the successful completion of the PIPE financing round. One of the world’s leading decentralised artificial intelligence (AI) treasury companies, Flora Growth, has announced the pricing of a $401 million private investment in public equity (PIPE) round. According to a September 19 press release, the move aims to fund the firm’s treasury strategy centred on AI Zero Gravity (0G) tokens. Upon completion of the PIPE round, Flora Growth will rebrand to ZeroStack, while still maintaining its current market ticker symbol, FLGC. Notably, the financing round is expected to close on or before September 26, 2025, pending customary approvals. Flora Growth Corp. (NASDAQ: FLGC) announced a $401 million PIPE financing led by Defi Development Corp., Hexstone Capital, and CSAPL. 0G Co-Founder Michael Heinrich will become Executive Chairman. The deal is expected to close on September 26. The company will adopt $0G as its… — Wu Blockchain (@WuBlockchain) September 19, 2025 Flora Growth Announces $401M PIPE with Strong Backing from Leading Crypto Firms DeFi Development Corp. (DFDV), the first treasury firm focused on Solana (SOL), led the financing round with a $22.88 million investment. Other partners included Hexstone Capital, Dispersion Capital, Blockchain Builders Fund, Carlsberg SE Asia PTE Ltd (CSAPL), Abstract Ventures, Salt, and Dao5. The fundraising exercise has already generated $35 million in cash commitments and $366 million worth of in-kind digital assets. Flora Growth sold its common shares and pre-funded warrants to investors at $25.19 per share. The company also pegged 0G tokens contribution at $3 per coin, adding that investors paying either cash or 0G tokens will also receive pre-funded warrants, exercisable once shareholder approval is granted. A big NASDAQ company (Flora Growth) just announced they’re raising $401 million. ︎ They plan to buy and hold $0G tokens as part of their company’s savings/treasury. Flora’s deal values $0G at around $3 per token for their planned purchase. Right now $0G is trading below… pic.twitter.com/qhOa3uT5ii — Jimmywontgiveup(Ø,G) (@jimmywontgiveup) September 20, 2025 Flora Growth Plans to Hold SOL in Its Treasury Flora Growth noted that it plans to hold part of its treasury in SOL. Joseph Onorati, the CEO of DeFi Development Corp., spoke on the partnership.“We’re thrilled to partner with FLGC on this fundraiser and look forward to driving a deep collaboration between 0G and Solana,” the CEO stated. Daniel Reis-Faria, Flora Growth’s incoming Chief Executive Officer (CEO), also spoke on the company’s latest initiative. He explained that the move encompasses financial restructuring and support for adopting AI infrastructures. The CEO commented: “This treasury strategy offers institutional investors equity-based exposure, enabling transparent, verifiable, large-scale, cost-efficient, and privacy-first AI development.” A Brief 0G Token Overview, Highlighting Reasons for Flora Growth’s Interest 0G is gaining significant traction, which has made experts describe the token as a breakthrough in decentralised AI. 0G’s model trained a 107 billion AI parameter model, representing a 357x improvement over Google’s DiLoCo research, challenging the idea that huge centralised data centres are needed for such projects. The 0G network proved that a decentralised network is highly effective for cost-effective computations, with transparent and privacy-first solutions. Unlike other AI blockchains, 0G integrated its computation, storage, and training marketplace into one platform, attracting Web2 and Web3 developers. In related news, Crypto2Community reported that Brera Holdings, an Ireland-based company, completed a $300 million PIPE financing round for a Solana-focused treasury on September 19. The fundraising program was led by Pulsar Group, a blockchain advisory firm based in the UAE. It received strong backing from the Solana Foundation, RockawayX, and ARK Invest. Like Flora Growth, Brera Holdings also rebranded to Solmate. eToro Platform Best Crypto Exchange Over 90 top cryptos to trade Regulated by top-tier entities User-friendly trading app 30+ million users 9.9 Visit eToro eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk. Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment, and you should not expect to be protected if something goes wrong.
XRP koers en de 21-maanden EMA: herhaling van geschiedenis of breuk met het patroon?
