The gap between the Bank of Canada and Federal Reserve policy rates narrowed to 150 basis points by December as the Fed kept cutting after both banks moved together in October, then reopened to 175 basis points once the Fed raised rates again in September. Each bank is following its own domestic mandate rather than coordinating: the Bank of Canada has held steady since October, citing tariff risk and inflation closer to target once gasoline is excluded, while the Fed reversed course entirely.
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