Magnifying Glass

AB Direct - Steers

Live: ---
Rail: ---

AB Direct - Heifers

Live: ---
Rail: ---

US Trade- Steers

Live: 203.00 (TX, KN)
Rail: ---

US Trade - Heifers

Live: 203.00 (TX, KN)
Rail: ---

Canadian Dollar

$69.90
0.15
January 29, 2025 News

Bank of Canada cuts key interest rate to 3 per cent

The Bank of Canada has announced a reduction of 25 basis points to its key interest rates, to 3 per cent.

This move is a part of a broader plan to normalize the Bank’s balance sheet and end quantitative tightening. Asset purchases will restart in early March, gradually stabilizing and modestly growing the balance sheet in line with economic growth.

The January Monetary Policy Report (MPR) highlights significant uncertainty due to the evolving policy landscape, particularly the threat of trade tariffs from the new U.S. administration. While the scope and duration of potential trade conflicts are unpredictable, the MPR provides a baseline forecast assuming no new tariffs.

Globally, the economy is expected to grow by about 3 per cent over the next two years. The U.S. is projected to see stronger growth due to increased consumption, while the euro area faces subdued growth due to competitiveness pressures. In China, recent policy actions are boosting demand and support near-term growth, despite ongoing structural changes.

In Canada, past interest rate cuts have started to boost the economy, with strengthening consumption and housing activity expected to continue. However, business investment remains weak, and the outlook for exports is supported by new oil and gas export capacity.

The Canadian labour market remains soft, with an unemployment rate of 6.7 per cent in December. Job growth has improved recently, and wage pressures are easing. The Bank forecasts GDP growth to strengthen to 1.8 per cent in both 2025 and 2026, following 1.3 per cent growth in 2024. This growth is somewhat higher than potential growth, gradually absorbing excess supply in the economy.

CPI inflation remains close to 2 per cent, with some volatility due to the temporary suspension of the GST/HST on certain consumer products. Shelter price inflation is elevated but easing gradually. The Bank expects CPI inflation to stay around the 2 per cent target over the next two years.

Financial conditions have diverged across countries since October. U.S. bond yields have risen due to strong growth and persistent inflation, while Canadian yields have slightly decreased. The Canadian dollar has depreciated against the U.S. dollar, reflecting trade uncertainty and the broader strength of the U.S. currency. Oil prices have been volatile, recently about $5 higher than assumed in the October MPR.

However, if broad-based and significant tariffs were imposed, the resilience of Canada’s economy would be tested. The Bank of Canada will closely monitor developments and assess the implications for economic activity, inflation, and monetary policy. The Bank remains committed to maintaining price stability for Canadians.

The Bank of Canada’s decision to cut the policy rate by 25 basis points to 3 per cent aims to boost household spending and strengthen the economy gradually. For the agricultural sector, this means potentially lower borrowing costs and improved economic conditions, which could support investment and growth in the industry. However, ongoing trade uncertainties and financial market volatility remain key factors to watch.

Leave a Comment

About the Author

Kara grew up on a grain farm near Bow Island, Alberta. After attending SAIT and the University of Calgary — where she obtained a degree in communication and media studies, and a diploma in broadcast news — Kara began her professional career working in agricultural communications and agricultural journalism. Kara now farms alongside her family and her husband on the family farm, where they raise a mix of livestock, crops, and barn cats.

Author

Cattle Report

Updated: 12/02/2025

Steers

Live: ---
Rail: ---

Heifers

Live: ---
Rail: ---

Choice Steers

Live: 203.00 (TX, KN)
Rail: ---

Choice Heifers

Live: 203.00 (TX, KN)
Rail: ---

Boner Cows

Over 500 lbs: 261.81

Canadian Dollar

$69.90   0.15

Livestock Price Insurance Index

Expiry Fed Feeder Calf
14-Apr-25 262 366 --
12-May-25 26 364 --
9-Jun-25 272 364 --
7-Jul-25 264 -- --
4-Aug-25 258 -- --
1-Sep-25 254 370 --
29-Sep-25 250 368 --
Last Updated on January 17, 2025