Bank of Canada to Cut 10% of Workforce by Mid-2025 Amid Federal Austerity Plan

The Bank of Canada plans to cut about 225 positions, or roughly 10% of its workforce, over the next six months as part of Prime Minister Mark Carney’s broader effort to trim federal spending. The layoffs are expected to be completed by June 2025, according to an internal memo obtained by Bloomberg.

Phased Layoffs to Meet 10% Budget Savings Target

The memo said the central bank has already taken multiple cost-control measures — including freezing hiring, reducing non-salary budgets, and offering early retirement packages — but these were not enough to meet the government’s 10% savings target by the end of 2026.

Bank spokesperson Paul Badertscher confirmed that the job cuts will span all departments but will not compromise core operations:

“As with similar programs in the past, we will ensure the Bank remains capable of fulfilling its mandate to serve Canadians.”

The central bank also aims to reduce its total budget by 15% between 2026 and 2028, followed by an additional 5% institutional cut by the end of 2028.

Post-Pandemic Expansion Drives Retrenchment

The bank acknowledged that the move reflects a retrenchment after several years of rapid growth.
Its workforce expanded from around 1,800 employees in 2019 to 2,350 by the end of 2023 as pandemic-era programs and regulatory responsibilities increased.

Economists say the move signals a return to leaner operations as inflation cools and the rate-hiking cycle nears its end.

Part of Federal Plan to Cut $60 Billion in Spending

The central bank’s layoffs are part of the federal government’s plan to cut C$60 billion in spending over five years, unveiled this week by Finance Minister François-Philippe Champagne.
The plan includes reducing the federal public service by 40,000 positions.

At the same time, the Carney government has expanded the central bank’s oversight role, including implementing the Consumer-Driven Banking Act, while allowing it to retain additional funds for new mandates.

Canada’s top civil servant, Michael Sabia, acknowledged in a message to federal employees that the cuts will have “real and profound impacts” on workers and their families.

“I will not downplay the consequences,” Sabia wrote. “To meet our C$60 billion savings goal, we must reduce, scale down, or end some programs entirely.”

Fiscal Tightening to Continue Through 2028

The Bank of Canada said layoffs will be phased in gradually, with early rounds affecting non-core functions and later stages including managerial and administrative restructuring.

Analysts expect the fiscal tightening to extend through 2028, as the government pursues a dual goal of reducing both public spending and debt-to-GDP levels amid slowing economic growth.