Borrowing costs began to ease for some Canadians on Wednesday after the Bank of Canada announced its first interest rate cut since March, lowering its overnight policy rate by 25 basis points, from 2.75% to 2.5%.

Commercial lenders, such as private banks, base their own lending rates on the central banks benchmark rate.

The Bank of Canada pointed to a weaker economy amid the ongoing trade war, noting that the latest GDP reports and a rise in the unemployment rate to over 7% last month meant that a rate cut was appropriate.

At the same time, the bank said inflation has remained relatively stable, with consumer and business price growth staying within the 1% to 3% annual target range.

The banks statement said: With a weaker economy and reduced inflation risks, the policy committee judged that lowering the interest rate was appropriate to achieve a better balance of risks.

It added: The disruptive effects of trade shifts will continue to add costs even as they weigh negatively on economic activity. The governing council is proceeding cautiously, paying close attention to risks and uncertainty. The bank remains focused on ensuring Canadians confidence in price stability during this period of global turbulence.

The Bank of Canada had kept its benchmark rate unchanged for the past three meetings, with Governor Tiff Macklem repeatedly stressing that uncertainty in the economic outlook required a more cautious monetary stance particularly in light of the trade war and tariff policies.