As autumn leaves fall and the holiday season approaches, businesses in Saint John, New Brunswick, are closely watching the latest economic signals from the Bank of Canada. In a significant move to address ongoing economic weakness, the Bank of Canada announced its second consecutive policy interest rate cut last week, bringing the rate down by 25 basis points to 2¼%. This marks a total reduction of 100 basis points since the beginning of the year, a development that could have varied impacts on local enterprises and consumers.

Interest Rate Cuts Aim to Stimulate a Slowing Economy

On November 5, 2025, Governor Tiff Macklem delivered an opening statement before the House of Commons Standing Committee on Finance, detailing the Bank’s recent policy announcement and its Monetary Policy Report. The decision to lower the policy rate reflects persistent economic weakness and contained inflationary pressures across Canada. For Saint John businesses, this could translate into more affordable borrowing costs, potentially encouraging investment and expansion during a traditionally busy period.

Navigating Trade Uncertainty and Inflationary Pressures

The Canadian economy has faced significant challenges, with a 1.6% contraction in GDP during the second quarter. This downturn is largely attributed to US tariffs and trade uncertainty, which have dampened exports and business investment. While the overall economic slowdown is helping to temper price increases, the trade conflict is simultaneously imposing higher costs on many businesses, creating a complex inflationary environment. The Bank of Canada anticipates these opposing forces will largely balance out, keeping inflation near its 2% target.

For Saint John, a city with strong ties to trade and industry, these national trends are particularly pertinent. Businesses involved in sectors such as manufacturing, logistics, and resource processing may feel the direct effects of trade friction and increased operational costs. Despite these challenges, household spending showed resilience in the second quarter, with robust consumer activity and a rise in residential investment, offering a glimmer of hope for local retailers and the housing market.

A Soft Labour Market and Gradual Recovery

The national labour market remains soft, with job losses concentrated in trade-sensitive sectors and overall weak hiring. September saw employment gains after two months of significant losses, but the unemployment rate held steady at 7.1%, and wage growth has decelerated. This could mean a more competitive job market for Saint John residents and a cautious approach to hiring for local businesses.

Looking ahead, the Bank of Canada projects modest GDP growth of approximately ¾% for the latter half of this year, with a gradual acceleration to about 1½% by 2027. This implies a slow absorption of excess supply in the economy. Governor Macklem emphasized that the current economic weakness is not merely cyclical but a structural transition, with US trade policy diminishing Canada’s economic prospects and productive capacity. Monetary policy can aid in adjustment but cannot fully restore the economy to its pre-tariff trajectory.

The Bank of Canada’s full statement can be found on their website: Opening Statement before the House of Commons Standing Committee on Finance.

Frequently Asked Questions

What is the new policy interest rate?

The Bank of Canada has lowered its policy interest rate by 25 basis points to 2¼%. This is the second consecutive cut this year.

How will US tariffs affect Saint John businesses?

US tariffs and trade uncertainty are contributing to a weaker Canadian economy, reducing exports and increasing costs for businesses. Saint John businesses in trade-sensitive sectors may experience these impacts directly through reduced demand and higher operational expenses.

What is the outlook for inflation?

The Bank of Canada expects inflation to remain close to its 2% target. While economic weakness is restraining price increases, trade conflicts are adding costs, creating offsetting pressures.