The Bank of Canada today reduced its target for the overnight rate to 3%, with the Bank Rate at 3.25% and the deposit rate at 2.95%.1 The Bank is also announcing its plan to complete the normalization of its balance sheet, ending quantitative tightening. The Bank will restart asset purchases in early March, beginning gradually so that its balance sheet stabilizes and then grows modestly, in line with growth in the economy.2

Projections in the January Monetary Policy Report (MPR) published today are subject to more-than-usual uncertainty because of the rapidly evolving policy landscape, particularly the threat of trade tariffs by the new administration in the United States. Since the scope and duration of a possible trade conflict are impossible to predict, this MPR provides a baseline forecast in the absence of new tariffs.

In the MPR projection, the global economy is expected to continue growing by about 3% over the next two years. Growth in the United States has been revised up, mainly due to stronger consumption. Growth in the euro area is likely to be subdued as the region copes with competitiveness pressures. In China, recent policy actions are boosting demand and supporting near-term growth, although structural challenges remain. Since October, financial conditions have diverged across countries. US bond yields have risen, supported by strong growth and more persistent inflation. In contrast, yields in Canada are down slightly. The Canadian dollar has depreciated materially against the US dollar, largely reflecting trade uncertainty and broader strength in the US currency. Oil prices have been volatile and in recent weeks have been about $5 higher than was assumed in the October MPR.

In Canada, past cuts to interest rates have started to boost the economy. 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.

Canada’s labour market remains soft, with the unemployment rate at 6.7% in December. Job growth has strengthened in recent months, after lagging growth in the labour force for more than a year. Wage pressures, which have proven sticky, are showing some signs of easing.

The Bank forecasts GDP growth will strengthen in 2025. However, with slower population growth because of reduced immigration targets, both GDP and potential growth will be more moderate than was expected in October. Following growth of 1.3% in 2024, the Bank now projects GDP will grow by 1.8% in both 2025 and 2026, somewhat higher than potential growth. As a result, excess supply in the economy is gradually absorbed over the projection horizon.

CPI inflation remains close to 2%, with some volatility due to the temporary suspension of the GST/HST on some consumer products. Shelter price inflation is still elevated but it is easing gradually, as expected. A broad range of indicators, including surveys of inflation expectations and the distribution of price changes among components of the CPI, suggests that underlying inflation is close to 2%. The Bank forecasts CPI inflation will be around the 2% target over the next two years.

Setting aside threatened US tariffs, the upside and downside risks around the outlook are reasonably balanced. However, as discussed in the MPR, a protracted trade conflict would most likely lead to weaker GDP and higher prices in Canada.

With inflation around 2% and the economy in excess supply, Governing Council decided to reduce the policy rate a further 25 basis points to 3%. The cumulative reduction in the policy rate since last June is substantial. Lower interest rates are boosting household spending and, in the outlook published today, the economy is expected to strengthen gradually and inflation to stay close to target. However, if broad-based and significant tariffs were imposed, the resilience of Canada’s economy would be tested. We will be following developments closely and assessing the implications for economic activity, inflation and monetary policy in Canada. The Bank is committed to maintaining price stability for Canadians.

Getting ready to move this winter? While it may not be as easy a move as in other seasons, with a little preparation you can accomplish a move that goes off without a hitch. For some helpful tips, read on.

• Be prepared to be flexible – Check the weather in the days leading up to your move. If a storm is forecasted for your moving day, consider rescheduling your move date. Get any pre-move errands completed in advance of your move, so you don’t get stuck trying to accomplish them in bad weather at the last minute.

• Prepare both homes for winter moving – Ensure both your old and new homes have clear, wide paths for moving, plastic sheeting to protect floors, and if it will be dark during any part of your move, check that the exterior lighting works, and consider headlamps.

• Protect belongings –Temperature changes from the warmth of your home to the cold of the moving truck can cause items like glass to break and electronics to malfunction, so secure these items according to the manufacturer’s instructions and have them loaded onto the truck last or transport them in your own vehicle to keep a closer eye on them.

• Organize utilities – Schedule utility hook-up at your new home before you move so you aren’t stuck without the ability to control indoor temperatures in the height of winter.

• Prepare your vehicle – Especially if you are making a long-distance move, make sure your vehicle has been serviced recently and is stocked with gas, washer fluid, first aid and emergency kits, and blankets.

• Show your movers some appreciation – A warm drink and something to eat for your movers will be a nice gesture to show you care.

Don’t let Mother Nature make moving more stressful than it needs to be, and plan ahead if you have a winter move coming up.

Instead of tackling your home room by room, approach decluttering by focusing on specific categories of items. This method allows you to see all items of the same type at once, helping you make better decisions about what to keep and what to let go. Here's how to do it effectively:

1. Start Small: Begin with less emotionally charged categories like clothes or books before moving on to sentimental items like photos or keepsakes.

2. Gather Everything Together: Collect all items in a category from every room. For example, if you’re decluttering clothes, bring every piece of clothing from closets, dressers, storage bins, and even the laundry. Seeing everything in one place gives you a clear picture of how much you actually own.

3. Sort and Assess: Go through each item one by one. Ask yourself questions like:

   • Do I use this regularly?
   • Does this bring me joy or serve a purpose in my life?
   • Is this a duplicate or unnecessary?

4. Create Clear Piles:

   • Keep: Items you love, use, and truly need.
   • Donate: Items in good condition that no longer serve you but could benefit someone else.
   • Recycle: Items that can’t be donated but can be repurposed.
   • Trash: Damaged items that can’t be reused or recycled.

5. Store Strategically: Once you've decided what to keep, organize those items in a way that’s easily accessible and logical for your lifestyle. Use storage bins, drawer organizers, or labeled containers to keep everything neat.

6. Move Methodically Through Categories: Follow a general order for decluttering categories, such as:

   • Clothes
   • Books
   • Papers
   • Miscellaneous items (e.g., kitchen tools, electronics)
   • Sentimental items

7. Set Limits: To prevent clutter from building up again, decide on limits for how much of each category you’ll keep. For example:

   • A single bookshelf for books
   • One drawer for kitchen gadgets
   • A small box for sentimental items

8. Reflect on What You’ve Learned: As you declutter each category, take note of patterns in your purchasing or holding habits. This can help you avoid accumulating unnecessary items in the future.

By decluttering by category, you simplify the process and ensure a thorough, organized approach to your home. It’s an empowering way to create a space that reflects what you truly value!