Bank of Canada cuts interest rate to 3.25% in December 2024: Employee rights

What did the Bank of Canada do?

On December 11, 2024, the Bank of Canada (BoC) cut its key interest rate by 50 basis points to 3.25 per cent.

The Bank Rate is now 3.75 per cent, while the deposit rate is 3.25 per cent.

“With inflation around two per cent, the economy in excess supply, and recent indicators tilted towards softer growth than projected, Governing Council decided to reduce the policy rate by a further 50 basis points to support growth and keep inflation close to the middle of the one to three per cent target range,” the central bank said in a news release.

“[Future] decisions will be guided by incoming information and our assessment of the implications for the inflation outlook. [We’re] committed to maintaining price stability for Canadians by keeping inflation close to the two per cent target.”

Another substantial rate cut

This decision marks the BoC’s fifth consecutive rate reduction. The bank lowered its key interest rate by 50 basis points to 3.75 per cent on October 23, 2024.

For a complete list of interest rate changes and detailed insights, visit our full rate change list.

Key highlights from the announcement

• Smaller-than-expected economic growth: Canada’s economy grew by one per cent in the third quarter, which was below the bank’s projection in October. Gross domestic product (GDP) growth in the quarter was pulled down by business investment, inventories and exports. The fourth quarter also looks weaker than projected.
• Lower interest rates helping consumer spending and housing activity: The bank noted both areas picked up, suggesting that recent rate reductions are beginning to boost household spending.
• Less immigration to affect inflation: The federal government’s decision to reduce immigration targets is expected to dampen demand and supply. Consumer price index (CPI) inflation is projected to average close to the two per cent target over the next couple of years.
• BoC to watch impact of federal and provincial “tax holiday” policies: A temporary suspension of the Goods and Services Tax (GST) on some consumer products, one-time payments to individuals, and changes to mortgage rules is expected to affect the dynamics of demand and inflation.
• Trump’s tariff threat affects economic outlook: The possibility of President-elect Donald Trump imposing new tariffs on Canadian exports to the United States has increased economic uncertainty.

When is the next rate announcement?

The next interest rate announcement from the Bank of Canada is scheduled for January 29, 2025.

How does this affect employment?

While unemployment inched higher to 6.8 per cent in November, Canada’s labour market remains soft.

The latest interest rate cut is expected to help stimulate business activity and consumer spending, which could lead to increased hiring.

However, the overall impact on employment will depend on how quickly the broader economy responds to lower interest rates and whether inflation remains under control.

Lost your job?

In the event that you’re fired or let go, it’s crucial to understand your employment rights in Canada.

Non-unionized employees can get up to 24 months of severance pay when they lose their job. This includes individuals working full-time, part-time, or hourly in Ontario, Alberta, and British Columbia.

Severance is the compensation Canadians receive from their employer when they are fired without cause.

• Fired for cause? It’s very likely that you are still entitled to full severance pay because employees often don’t meet the conditions necessary for this type of dismissal.

Regardless of a company’s grasp on employment law, they are legally required to provide proper compensation following a termination.

This concept applies during challenging economic conditions, downsizing, the closure of a business, or major public health events such as the COVID-19 pandemic.

WATCH: Employment lawyer Lior Samfiru shares five fast facts about termination without cause on an episode of the Employment Law Show.

Talk to an employment lawyer

If you’ve been fired or let go for any reason, contact the experienced employment law team at Samfiru Tumarkin LLP.

We’ve successfully represented tens of thousands of non-unionized workers in Ontario, Alberta, and B.C.

In addition to severance package negotiations, our lawyers can assist you on a broad range of employment matters, including:

Contact us or call 1-855-821-5900 to get the advice you need and the compensation you deserve.