Author: Erik Hertzberg and Nojoud Al Mallees
(Bloomberg) — Bank of Canada officials discussed delaying a rate cut until more details are available on Prime Minister Mark Carney’s budget and U.S. trade policy.
In a summary of deliberations on the Oct. 29 decision, policymakers said they would also have more information on labor market weakness, input cost pressures and underlying inflation by waiting until future meetings.
The central bank ultimately opted to cut the policy rate by a quarter of a percentage point to 2.25%, which it deemed “more stimulating” than their estimate of a neutral rate range – where borrowing costs neither encourage nor constrain economic growth.
“The case for a rate cut in October is seen as stronger due to persistent oversupply, a weak labor market, tepid growth expected in the second half of the year and inflation expected to remain close to target,” the bank said in a filing on Wednesday.
Officials also made clear that monetary policy “may be approaching its limits in supporting the economy under current circumstances.”
Finance Minister Francois-Philippe Champagne presented the Carney government’s first budget about a week after the central bank cut interest rates. The fiscal plan shows a deepening of the federal government’s deficit to fund infrastructure, the military and housing, and expands investment tax credits aimed at attracting private business spending.
Officials at the bank agreed they should be “as clear as possible” about their willingness to keep borrowing costs near current levels. The paper reiterated their view that the benchmark overnight rate “is at an appropriate level to keep inflation close to 2% while helping the economy.”
Policymakers say a shift toward protectionism in U.S. trade policy is unlikely to be reversed, giving the central bank more “confidence” to be more forward-looking even amid heightened uncertainty. The central bank provided a forecast of economic fundamentals for October for the first time since January.
At the same time, the Council agreed that monetary policy “can play a role in mitigating spillovers from hard-hit sectors to other parts of the economy.”
The bank said the automotive, steel, aluminum and lumber industries were “hardly hit” by targeted U.S. tariffs. Still, declining U.S. demand for Canadian goods and services has spread to other parts of the economy.
The impact of the trade war on employment has also become more pronounced, with officials describing the labor market as “soft.”
“Since January, job losses have been concentrated in trade-related industries, while businesses in other industries appear to be retaining their workforces for now. However, members expressed concerns that labor market weakness could persist and expand,” the report said.
This came after Statistics Canada’s October Labor Force Survey showed the economy added 66,600 jobs, marking the second consecutive month of stronger-than-expected employment data. The unemployment rate also fell from 7.1% to 6.9%.
The central bank reiterated its view that underlying price pressures are around 2.5%. Officials said they believed there were “beyond-normal risks and uncertainties” on inflation, including ongoing trade talks with the United States and an upcoming review of the North American Free Trade Agreement.
Policymakers will determine borrowing costs on December 10.
—With help from Mario Baker Ramirez.
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Bank of Canada Bloomberg BoC BoC Meeting Minutes Summary of Review of 2025 Budget Rate Decision
Last modified: November 12, 2025
