The Bank of Canada building in Ottawa is featured in a Reuters photo.



The Bank of Canada's significant rate cut of 50 basis points on December 11 was a challenging decision, as revealed in minutes from the meeting released on Friday. The move, which reduced the key policy rate to 3.25%, aimed to counter slower economic growth. While the decision was ultimately unanimous, it sparked considerable debate among the Governing Council members.
Some policymakers leaned toward a smaller 25-basis-point reduction, citing encouraging signs in consumer spending and the housing market. They argued that earlier rate cuts were still working their way through the economy, making it prudent to wait and observe before implementing another aggressive move.

Others, however, pushed for the larger 50-basis-point cut, emphasizing growing risks to the economic outlook. They expressed concerns over weakening growth projections and potential downside risks to inflation. These members believed that a bolder step was necessary to safeguard the economy, even if some recent data didn’t fully support such a drastic move.

The minutes highlight how closely balanced the decision was. “Each member acknowledged the difficulty of the call, basing their views on data and the anticipated trajectory of growth and inflation,” the report noted. While the more aggressive approach won out, it wasn’t without hesitation. Some members worried that a substantial cut might overshoot what was needed in the coming months.

Governor Tiff Macklem stressed that while this decision marked a significant shift, any future rate reductions would likely be smaller and more measured. This adjustment in tone signals a departure from earlier indications that consistent easing was the central bank's primary strategy for supporting growth.

The decision to choose the larger rate cut also reflected updated forecasts, which painted a bleaker picture of economic growth compared to predictions made in October. The council concluded that monetary policy no longer needed to remain strictly restrictive, making room for more accommodative measures.

As for the future, the Governing Council remains divided over how much further rates might need to be reduced. The minutes revealed varying opinions on the scale and timing of future cuts. However, members reached a consensus to approach each decision cautiously, taking stock of evolving economic conditions at each meeting.

The central bank’s move is critical for Canada’s economy, as policymakers navigate a fine balance between supporting growth and maintaining stability. With uncertainties still looming, the path forward will be taken one calculated step at a time.

How useful was this post?

Click on a star to rate it!

Average rating 0 / 5. Vote count: 0

No votes so far! Be the first to rate this post.

You may also like

S&P/TSX Composite, U.S. Stocks Close Higher Before Tariff News

Stock markets in Canada and the U.S. closed higher on Wednesday as investors braced for an announcement from former U.S.....

Tariffs Spark Market Turmoil as Investors Brace for Impact

Investors worldwide are rattled by the latest tariff announcements, triggering sharp declines in stock markets across major economies. Wall Street....

Markets Brace for Turmoil as Trump’s Tariff Plans Loom

With just hours left before U.S. President Donald Trump reveals his much-anticipated tariff strategy, global markets have hit a standstill.....

TSX Gains 100+ Points, U.S. Stocks Mixed Before Tariff Day

Canada’s main stock index climbed over 100 points on Tuesday, while U.S. markets showed mixed results ahead of a crucial....

Wall Street Eyes Market Dips, But When Will It Be Safe to Buy?

The U.S. stock market is wrapping up one of its roughest quarters since the 1980s, trailing global markets by the....

Energy Stocks Boost S&P/TSX, U.S. Markets Mixed Ahead of Tariffs

Canada’s main stock index climbed on Monday, driven by gains in energy and industrial shares as oil prices surged. Meanwhile,....

Canada’s Economy Faces Slowdown as Tariff Pressures Rise

The Canadian economy started 2025 with momentum but is now losing steam due to harsh winter conditions and the looming....

Markets Slide 400 Points as Tariff, Inflation Fears Grow

Canadian and U.S. stock markets took a sharp dive on Friday as investors reacted to concerns about inflation and looming....

Stock Markets React as U.S. Auto Tariff Plans Shake Industry

Canada’s stock market remained unchanged on Thursday, while U.S. markets saw a dip following President Donald Trump’s announcement of new....

GameStop’s Bold Bitcoin Move Sparks Market Concerns

GameStop’s stock took a nosedive on Thursday after the company announced a controversial plan to sell debt and use the....

ICBC Announces $110 Rebates for Eligible Drivers

Many ICBC customers will soon receive $110 rebates, as the auto insurer distributes a new round of refunds. The rebates,....

Wall Street Holds Steady as Trump Media Soars Despite Market Uncertainty

Wall Street showed resilience on Tuesday, following a strong surge the previous day fueled by optimism that President Donald Trump’s....