Fed and Bank of Canada rate cuts may shift borrowing costs and market sentiment this week
Central banks in North America are poised to make decisive moves this week, with both the US Federal Reserve and the Bank of Canada expected to cut interest rates—a rare moment of monetary action while most of their global peers stand pat, according to Bloomberg.
These anticipated quarter-point reductions reflect mounting concerns about economic growth and labour market softness on both sides of the border, even as inflation remains a persistent risk.
The Federal Reserve’s expected cut would bring the federal funds rate to a range between 3.75 percent and 4 percent, following a similar move in September, as reported by CNBC.
While not all consumer borrowing costs will drop in tandem, shorter-term rates—such as those tied to the prime rate—are likely to respond more quickly, impacting products like credit cards and home equity lines of credit.
However, experts caution that even with lower rates, credit card APRs are expected to remain elevated, offering only modest relief to households carrying balances.
In Canada, the Bank of Canada is forecast to lower its benchmark rate by 25 basis points to 2.25 percent, despite recent inflation and employment data coming in stronger than expected, as noted by Bloomberg.
Policymakers appear confident that headline inflation of 2.4 percent and core measures averaging 3.15 percent are sufficiently contained to justify supporting an economy still feeling the effects of tariffs and global uncertainty.
The broader global context remains one of caution.
The Bank of Japan is expected to hold rates steady, while the European Central Bank has signalled no further easing at this time.
According to Bloomberg, most Group of Seven central banks are watching the impact of US tariffs and domestic price trends, with a clearer outlook likely to emerge by December’s round of meetings.
