Interest rate announcement: cut likely as economy slows, McMaster economist says

Hamilton, ON, Sept. 15,2025 – The Bank of Canada will cut the benchmark interest rate on Wednesday, a McMaster economist says.

“Canada’s economy shrank in the second quarter and unemployment has been rising through the summer. With the headline inflation figure hovering around the Bank’s target of 2 per cent, the Bank is under a lot of pressure to lower rates to shore up the economy,” says Colin Mang, assistant professor of economics.

Mang says that while inflation appears to be under control, other indicators point to a slowing economy. The central bank is likely to act now to prevent a deeper downturn and to support consumer and business confidence heading into the fall.

“Consumer spending has held up pretty well throughout the year, but business investment has stagnated, and exports have dropped due to President Trump’s tariffs. Cutting interest rates will ease financial pressure on Canada’s indebted households. But, until we have more certainty about our future trading relationship with the United States, lower rates are unlikely to trigger a big increase in investment.”

Colin Mang can be reached directly at colinmang@mcmaster.ca.

For help connecting with him or other McMaster experts, please contact: Andrea Lawson lawsoa7@mcmaster.ca

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