12:21 PM EDT, 10/29/2025 (MT Newswires) -- The Toronto Stock Exchange is down 111 points at midday with commodities the sole gainers. Energy is up 1.3% while miners is 2% higher.

The Bank of Canada also cut its interest rates to 2.25% this morning. CIBC's Andrew Grantham noted the Bank of Canada signaled a reluctance to cut further unless the economic outlook deteriorates. The quarter point cut, bringing the overnight rate down to 2.25%, was widely expected by forecasters and financial markets. However, Grantham said, the accompanying statement said that Governing Council sees the new policy rate as at "about the right level" to keep inflation at 2% while also helping the economy through a period of structural change, suggesting a willingness to respond only if the "outlook changes".

In terms of that outlook, Grantham noted the accompanying Monetary Policy Report returned to providing one base case forecast, although risks around this are obviously even higher than normal and depending on how trade negotiations with the US play out. The forecast for 1.2% GDP growth this year, 1.1% in 2026 and 1.6% in 2027 is made under the assumption that the effective tariff rate on Canadian goods from the US is about 6% (up from around 4.5% a quarter ago). The statement suggested that excess capacity in the economy would persist in the near term and be taken up gradually thereafter, with the current estimate for the output gap being between -0.5% and -1.5%.

Following today's cut, Grantham said, the BoC appears to be moving back onto the sidelines to assess incoming data, the potential impact of next week's Federal Budget and the progression of trade discussions.

Royce Mendes at Desjardins also noted the BoC's signaling there's a high bar for further action. "That's not because policymakers believe that the Canadian economy will return to full health anytime soon. The Governor suggested that slack will only be absorbed gradually. That said, in their view, monetary policy only has a limited role in supporting the difficult transition facing the economy, given that the structural damage will reduce capacity and add costs."

Mendes noted the communique accompanying the rate decision was explicit that, if growth and inflation evolve in line with the central bank's latest projections, Governing Councill is comfortable leaving the policy rate unchanged at the current 2.25%.

In stocks, New Gold ( NGD ) has jumped 14% and is at a multi-year high after reporting third-quarter earnings and production beats on Tuesday.