The Bank of Canada made it plain yesterday that this might be it for rate relief.

Canada’s central bank cut its interest rate by 25 basis points to 2.25 per cent, but its main takeaway was that if the economy behaves as forecast this rate is “at about the right level.”

The bank’s argument is that there is a limit to how much monetary policy can support the economy through the “structural transition” that

Donald Trump’s trade war has brought about. Time for Ottawa to step in. Markets took this to heart and cut odds of a rate reduction in December to 7 per cent, and 35 per cent for next year.

Despite that, some economists still believe the Bank of Canada will have to step back into the fray to support the economy.

Both Capital Economics and Bank of America think the central bank will cut another 50 basis points in 2026, bringing the end rate to 1.75 per cent.

Capital’s forecasts for gross domestic product and inflation are lower than the Bank of Canada’s, suggesting more room for rate relief.

Stephen Brown, deputy chief North America economist, said Capital had expected these cuts to come in the first and second quarters, but after the bank’s comments Wednesday, pushed them back to April and July.

“Of course, getting the precise timing right is always tricky, but the key message is that we still think the Bank will be forced into more action eventually,” said Brown.

Bank of America expects cuts of a quarter point each in March and April.

“We continue to believe the BoC will need to cut below their neutral range to support CAD growth against a tariff-led slowdown,” said the team led by economist Carlos Capistran.

Not all economists share this view. Royal Bank of Canada forecasts no further rate cuts as fiscal stimulus unveiled in next week’s federal budget takes over “the heavy lifting” in supporting the economy through the trade shock.

Oxford Economics also said “this will likely be the last rate cut of this cycle for the BoC,” though it didn’t rule out another small trim in the coming year if the economy and labour market weakens more than expected.

“Still, we don’t think it will cut rates deeply into stimulative territory well below 2 per cent, given elevated trade policy uncertainty, persistent upside risks to inflation from the trade war, and major new federal fiscal stimulus that will do most of the heavy lifting to support the economy,” it said.

When questioned by reporters Wednesday on what would prompt the Bank of Canada to move off the sidelines, governor

Tiff Macklem said policy makers would need to see “an accumulation of evidence” beyond monthly data.

But he left the door open in his opening remarks, stressing how uncertainty amid Trump’s shifting trade policy remains the name of the game.

“The range of possible outcomes is wider than usual — we need to be humble about our forecast,” Macklem said. “If the outlook changes, we are prepared to respond.”

READ OUR RED INK SERIES

Governments around the world are awash in debt, and Canada is no exception. But just how severe is the problem and what will the consequences be? With the federal deficit in the spotlight ahead of the Nov. 4 budget, the Financial Post is exploring the state of sovereign debt in Canada and beyond in a weeklong series called Red Ink. From a primer on Canadian indebtedness to the consequences of a U.S. default, we’ll explore some major questions about government debt and the looming deficit.

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Is this chart the Bank of Canada’s final word on this rate cycle?

As outlined above, economists have different views on the central bank’s path forward.

The Bank of Canada has cut 2.75 percentage points off its interest rate since it peaked at 5 per cent in 2023. Its latest cut brings the rate to 2.25 per cent, lower but still a far cry from 0.25 per cent borrowers enjoyed during the pandemic.

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  • MEG shareholders vote on takeover bid from Cenovus Energy
  • Economic Club of Canada hosts Canadian Pension CEO breakfast
  • Earnings: Restaurant Brands International, Parkland Corp., Fairfax Financial Holdings Ltd., Telus Corp., Power Corp. of Canada, Eldorado Gold Corp., AltaGas Ltd., Athabasca Oil Corp., Baytex Energy Corp.
  • Bank of Canada raises the bar for any future rate cuts
  • Microsoft signs 10-year deal with Canadian cleantech company that turns CO2 into rocks
  • Saskatchewan’s uranium mines are humming. Now, there’s an $80 billion nuclear deal with the U.S.

Amid a tough job market and troubles affording homeownership, many young Canadians could be skipping retirement planning despite fears of not having enough in their senior years.

According to a survey by Canada Pension Plan’s investment board about 66 per cent of respondents aged 28 to 44 said they were afraid of running out of money in retirement.

Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at wealth@postmedia.com with your contact info and the gist of your problem and we’ll find some experts to help you out while writing a Family Finance story about it (we’ll keep your name out of it, of course).

McLister on mortgages

Find out more Want to learn more about mortgages? Mortgage strategist Robert McLister’s

Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won’t want to miss. Plus check his

Financial Post on YouTube

mortgage rate page for Canada’s lowest national mortgage rates, updated daily. Visit the Financial Post’s YouTube channel for interviews with Canada’s leading experts in business, economics, housing, the energy sector and more.

Today’s Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, Canadian Press and Bloomberg.

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  • Gap between Canada and the United States economies is widening — and Trump’s not only to blame

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