06:14 AM EDT, 09/18/2025 (MT Newswires) -- Bank of Montreal said Thursday the Bank of Canada's real policy rate is back near zero, last seen in early 2023 when the central bank was tightening and inflation was falling.

Canada remains far from the deeply negative real rates that fueled excesses in housing and household spending during 2021-22, the bank said.

Still, BMO noted that a zero real rate is likely enough to start supporting the economy, and another 50-basis-point cut, assuming inflation stays around 2.5%, would move real rates into negative territory.

Real policy rates averaged about -0.6% in the decade following the Great Recession, but that period featured lower neutral rates, BMO said. While "neutral" is a shifting target, the bank sees Canada as roughly at that point now.

Further easing would begin to add monetary stimulus, BMO said.