The Globe and Mail reports in its Thursday edition that the U.S. Federal Reserve cut its key interest rate by a quarter-point on Wednesday, marking its third reduction this year. An Associated Press dispatch to The Globe reports that it signalled, however, expectations of slower rate cuts next year due to elevated inflation. The Fed now projects just two quarter-point cuts in 2025, down from four estimated in September, which means consumers may not see significantly lower borrowing rates.
This decision affected global currency markets, causing the loonie to fall nearly a percentage point against the greenback, now trading near 69.3 U.S. cents, its lowest since March, 2020. While the strong U.S. dollar drives much of this, factors specific to Canada include the widening gap between U.S. and Canadian rates and potential tariffs from president-elect Donald Trump.
Fed officials noted they are nearing a "neutral" benchmark rate of about 4.3 per cent, indicating a thoughtful approach to more rate adjustments. Wednesday's projections indicate that policy-makers believe they are nearing their target level. The benchmark rate is 4.3 per cent, following a half-point cut in September and a quarter-point reduction last month.
© 2025 Canjex Publishing Ltd. All rights reserved.