Bank of Canada cuts interest rate to 3% in January 2025: Employee rights

What did the Bank of Canada do?

On January 29, 2025, the Bank of Canada (BoC) cut its key interest rate by 25 basis points to three per cent.

The Bank Rate is now 3.25 per cent, while the deposit rate is 2.95 per cent.

“In Canada, past cuts to interest rates have started to boost the economy,” the country’s central bank said in a news release.

“The recent strengthening in both consumption and housing activity is expected to continue. However, business investment remains weak. The outlook for exports is being supported by new export capacity for oil and gas.”

The BoC added that it’s ending quantitative tightening — gradually restarting asset purchases in early March.

Rate cuts continue

This decision marks the bank’s sixth consecutive rate reduction. It lowered its key interest rate by 50 basis points to 3.25 per cent on December 11, 2024.

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

Key highlights from the announcement

• The BoC expects gross domestic product (GDP) to grow by 1.8 per cent in both 2025 and 2026, “somewhat higher” than potential growth.
• Due to reduced immigration targets, the bank believes both GDP and potential population growth will be more moderate than was expected in October.
• The BoC noted that CPI inflation remains close to two per cent, with some volatility due to the temporary suspension of the GST/HST on some consumer products.
• Canada is bracing for a protracted trade conflict with the U.S. If President Donald Trump makes good on his threat to impose a 25 per cent tariff on all Canadian goods, the bank said it will most likely lead to weaker GDP and higher prices in in the country.
• “If broad-based and significant [U.S.] tariffs [are] imposed, the resilience of Canada’s economy [will] be tested,” the BoC’s release reads. “We will be following developments closely and assessing the implications for economic activity, inflation, and monetary policy in Canada. [We are] committed to maintaining price stability for Canadians.“

When is the next rate announcement?

The next interest rate announcement from the Bank of Canada is scheduled for March 12, 2025.

How does this affect employment?

With unemployment at 6.7 per cent in December, Canada’s labour market remains soft.

The central bank’s 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, inflation, and U.S. tariffs.

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.