Bank of Canada to cut rates 25 basis points on Oct. 29, economists say. Most economists polled by Reuters expect a second consecutive 25 basis point reduction to support a weak Canadian economy now under pressure from U.S. tariff threats. In the short term this will ease borrowing costs and aim to steady domestic demand. Over the long term it may lengthen the run of easier policy if trade frictions persist. Globally, the move could weigh on the Canadian dollar, alter cross-border capital flows to the U.S., Europe and Asia, and affect emerging market sentiment as central bank paths diverge.

Why economists expect the Bank of Canada to act

Economists told Reuters they see a 25 basis point cut on Oct. 29 as a response to weaker domestic momentum and the immediate drag from U.S. tariffs. The call for a second consecutive cut signals that the bank sees downside risks that require more stimulus now to protect growth. The tariff backdrop raises uncertainty for exports and business investment, which can slow hiring and household spending.

Policy committees typically act when downside risks rise or inflation softens. Here the pressing factor is tariffs that could lower demand for Canadian goods in the United States, and that makes timing critical. A near-term cut seeks to arrest momentum loss. If trade tensions persist the bank could be pushed toward a longer easing cycle than markets currently price.

Market reaction: rates, currencies and bonds

Expectations of a policy cut change the yield curve and currency dynamics. A 25 basis point move lowers short-term yields and can push investors toward longer-dated government bonds to lock in returns. That typically flattens the curve in the immediate period and can increase demand for high-grade Canadian debt.

On currencies, a rate reduction usually weakens the Canadian dollar versus the U.S. dollar as interest rate differentials narrow. That can help exporters by making goods cheaper abroad but may raise import costs and push up some consumer prices. For international investors, shifts in Canadian rates alter cross-border carry trades involving the U.S., Europe and Asia, and they may reweight portfolios toward markets where central banks signal higher rates.

Equities and corporate signals from recent headlines

Global equity moves reflect a mix of macro data and company news. European stocks fell as traders awaited U.S. inflation data, signaling broader sensitivity to U.S. price signals that help shape policy decisions worldwide. In the U.S., futures rose after an upbeat report on chipmaker Intel (NASDAQ:INTC). Intel’s shares jumped on evidence that large investments and cost cuts can revive returns, and that helped buoy sentiment into the inflation release.

Consumer staples also showed resilience. Procter & Gamble (NYSE:PG) topped estimates, driven by steady demand for beauty and hair-care products. That suggests pockets of consumer strength even as growth looks uneven. Defense and aerospace saw upside too. General Dynamics (NYSE:GD) beat estimates on strong business jet deliveries, pointing to corporate segments that can outpace the broader economy.

In technology, IBM (NYSE:IBM) reported that a key quantum computing algorithm can run on conventional AMD processors. That development highlights how legacy tech firms aim to extend relevance while the broader tech sector adjusts to investment cycles and cost discipline. Corporate results like these influence near-term equity flows and help explain why some sectors can outperform even when macro signals turn cautious.

Global ripple effects: tariffs, inflation data and policy interplay

Tariff threats from the U.S. are the immediate policy risk for Canada. If implemented or intensified, tariffs would reduce demand for Canadian exports and raise uncertainty for investment plans. That is why economists view the cut as timely. Central banks across advanced economies watch both domestic indicators and cross-border spillovers. U.S. inflation readings due this week therefore matter for global markets. Strong U.S. inflation can keep the Federal Reserve on a firmer path and widen the rate gap with Canada, while softer data can support another round of easing in countries facing weak growth.

For Europe and Asia, lower Canadian rates are not a direct policy signal but they affect global rates through capital flows. Emerging markets can feel an indirect impact as investors reassess yield differentials and risk appetite. When advanced-economy policy paths diverge, emerging markets typically experience increased volatility in foreign exchange and bond markets.

What investors and market participants should watch next

Key near-term items include the Bank of Canada decision on Oct. 29 and U.S. inflation prints that the market is awaiting. Corporate earnings surprise to the upside in select sectors, such as technology and consumer staples, will support equities even while growth expectations become more cautious. Watch how bond markets price the next moves in central bank policy because those expectations shape financing costs for governments and firms.

Also monitor trade headlines tied to U.S.-Canada relations. Any escalation or easing in tariff rhetoric will alter economic projections and could force further central bank responses. Finally, regulatory and supervisory actions in the U.S., such as proposed changes to bank stress tests, could alter risk pricing and liquidity conditions across credit markets.

In sum, the expected Bank of Canada cut is a near-term policy response to trade-induced weakness. It has immediate impacts on yields and the Canadian dollar, and it interacts with global inflation data, corporate results and regulatory moves to shape market flows. Investors will be watching the Oct. 29 decision and upcoming data releases for clues about how broad and persistent the policy response may become.