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 bank’s 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 bank’s 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.

Copper prices fell to a one-week low on Wednesday as traders cut positions ahead of the U.S. Federal Reserve’s interest rate decision, while demand from China, the world’s top metals consumer, remained weak following copper’s recent rally.

Benchmark three-month copper on the London Metal Exchange (LME) dropped 1.6% to $9,963 per metric ton in official open-outcry trading, though it held above its 21-day moving average, which offered support around $9,910. The metal, widely used in energy and construction, had touched $10,192.50 on Monday, its highest level in 15 months.

Alastair Munro, senior base metals strategist at Marex, said: “China has been on the sell side of copper this week. But in reality there has been no systematic demand, coupled with countertrend bearish signals, which has led to underperformance across the metals complex.”

Official data released Wednesday showed that China’s copper output rose 15% year-on-year in August.

Neil Welsh, head of metals at Britannia Global Markets, noted that traders are looking for more clarity from the Fed not only on the widely expected rate cut, but also on the future policy path. He added: “With the dollar already down about 10% since the start of the year and weak labor market data, traders are searching for signals that tonight’s cut could be the first in a series of reductions.”

Other LME metals

Aluminum fell 1.3% to $2,683 a ton in official trading, after hitting a six-month high of $2,720 on Tuesday. The cash-to-three-month spread widened to $16 a ton on Tuesday, its highest since March, highlighting tightness in the LME system during the current settlement week as short holders were forced to cover or roll positions. The tom-next spread — the cost of buying aluminum tomorrow and selling it the day after — slipped to zero on Wednesday from $13 a ton a day earlier.

According to LME data, a single party held more than 40% of outstanding September long positions, against several shorts.

Among other metals:

Zinc dropped 1.3% to $2,952.

Lead declined 0.6% to $1,998.5.

Tin fell 1.5% to $34,365.

Nickel lost 1.2% to $15,250.

Bitcoin rose slightly on Wednesday, stabilizing after recent gains, as traders focused on the upcoming U.S. Federal Reserve rate decision later in the day for clearer signals on monetary policy and the outlook for the U.S. economy.

The world’s largest cryptocurrency had reached its highest level in nearly a month on Tuesday after recouping part of the losses suffered in late August. Cryptocurrencies overall have benefited this week from improving risk appetite as markets bet on an imminent U.S. rate cut. However, gains remain capped by growing doubts over corporate treasury strategies toward digital assets.

Bitcoin climbed 0.5% to $116,552 by 01:23 a.m. Eastern time (05:23 GMT).

Fed Decision… and Powell’s Remarks in Focus

The Fed is widely expected to cut interest rates by at least 25 basis points at the conclusion of its meeting on Wednesday, with some traders betting on a larger 50-basis-point reduction.

Expectations have been reinforced by mounting evidence of a slowdown in the U.S. labor market, a key factor pushing the Fed to consider policy easing. Still, signs of persistently high inflation have left markets cautious about the central bank’s outlook.

Fed Chair Jerome Powell has repeatedly warned about the inflationary effects of high U.S. tariffs and is expected to reiterate these concerns in his speech this evening.

Even so, lower U.S. interest rates typically favor cryptocurrencies, as they boost liquidity flowing into risk assets. Notably, Bitcoin’s major bull run in 2021 was fueled by ultra-loose monetary policy in the aftermath of the COVID-19 pandemic.

Bitcoin Reserves Drop, Stablecoin Balances Rise

Data from CryptoQuant showed that Bitcoin reserves on centralized exchanges fell this week to their lowest level since January 2023, suggesting more coins are being moved into private wallets and away from active trading, which reduces potential selling pressure.

At the same time, stablecoin balances on exchanges have increased, reflecting a build-up of ready-to-invest liquidity that could support additional buying and sustain market gains in the coming days.

Possible Scenarios for Bitcoin’s Path

Analyst Ted Bellows outlined two main scenarios for Bitcoin’s price action after the Fed decision:

Scenario 1: Controlled pullback before new rally

Bitcoin could slip toward $104,000 as markets digest the rate cut. This would be seen as a “healthy correction” to shake out weak hands and excessive leverage before resuming a stronger uptrend. That level is viewed as a key support for re-energizing buyers.

Scenario 2: CME gap near $92,000

In a more bearish view, Bitcoin could fall further toward $92,000, an area aligned with an unfilled gap in Chicago Mercantile Exchange futures. Such corrections often attract prices, though this dip might weigh on sentiment in the short term. Still, it could set the stage for a strong rebound to new record highs once the correction completes.

Long-Term Trend Remains Bullish

Despite near-term caution, analysts including Bellows remain optimistic that Bitcoin is in the midst of a broader bullish cycle. Even if the Fed decision sparks short-term volatility, most forecasts see any retreat as a temporary stop on the road to new record highs later in 2025.

For investors, the essential question is not whether Bitcoin will dip, but how quickly it can recover once markets absorb the Fed’s move.

Oil prices fell on Wednesday after gaining more than 1% in the previous session, though losses were limited by ongoing geopolitical tensions, while traders awaited an expected interest rate cut from the U.S. Federal Reserve later in the day.

Brent crude futures dropped 62 cents, or 0.9%, to $67.85 a barrel by 10:42 GMT, while U.S. West Texas Intermediate (WTI) crude slipped 63 cents, or around 1%, to $63.89 a barrel.

Both benchmarks had settled more than 1% higher on Tuesday, supported by concerns over potential disruptions to Russian supply after Ukrainian drone strikes on ports and refineries. Reuters cited three industry sources saying Transneft, Russia’s pipeline monopoly, warned producers they may be forced to reduce output due to infrastructure damage.

John Evans, analyst at PVM Oil Associates, said: “If the drone damage to Russian infrastructure proves short-lived, then the recent $5-a-barrel trading range is likely to hold.”

He added that with current sanctions and rising OPEC supply, “the only real hope for higher prices lies in a shortage of distillates as winter approaches.”

Moscow: EU Plans Will Not Impact Russia

Kremlin spokesman Dmitry Peskov said Wednesday that European Union plans to accelerate the phase-out of Russian energy and commodities would not affect Moscow.

Despite sanctions, Europe still imports billions of euros’ worth of Russian energy and goods — from liquefied natural gas to enriched uranium — though its purchases of Russian oil and gas have fallen sharply.

At the same time, investors are awaiting the outcome of the Federal Reserve’s September 16–17 meeting, where newly appointed Governor Stephen Miran, selected by the Trump administration, joins the deliberations. While markets have already priced in a 25-basis-point cut, attention is firmly on Fed Chair Jerome Powell’s guidance on the future policy path.

Separately, preliminary data from the American Petroleum Institute showed U.S. crude and gasoline stocks fell last week, while distillate inventories rose. The market now awaits official figures from the Energy Information Administration, with a Reuters poll of nine analysts forecasting a drop in crude inventories but increases in gasoline and distillates.

Chris Beauchamp, chief market analyst at IG Group, said: “The market looks at a crossroads over whether the recent oil rebound can continue, with reports of major funds building heavy short positions reflecting ongoing oversupply fears. That could make gains harder to sustain.”

He added that Russia’s continued testing of NATO’s resolve may keep tensions in check, putting further downward pressure on prices and making a retest of recent lows more likely.