The Bank of Canada announced a cut of a quarter of a percentage point to its key interest rate last week, bringing the rate down to 4.75%.
Canada is the first country in the G-7 to cut rates following the moves in recent years to increase rates throughout the worldwide economy. Canada has been increasing rates since March 2022 to deal with inflation.
The Canada central bank felt confident that inflation is moving towards its target of 2% and so were willing to make the cut.
Economists are predicting that this will start a move across the G-7 economies to cut interest rates. This would be good news for UK businesses. The International Monetary Fund (IMF) have also recommended that UK interest rates could be cut to 3.5% by the end of the year.
See: https://www.bbc.co.uk/news/articles/cldd6x6gglxo
The UK economy continues to show a mixed picture, with recent data highlighting both relief for households and ongoing challenges for businesses.
With 2025 coming to a close, you may already be starting to reflect on how the year unfolded in your business.