The Bank of Canada has announced plans to eliminate approximately 10% of its workforce, equivalent to around 225 employees, as part of a nationwide effort to curb government spending. The cuts, revealed in an internal memo obtained by Bloomberg News, will take place over the next several months and are expected to conclude by June 2026.

This workforce reduction aligns with Prime Minister Mark Carney’s broader fiscal initiative to streamline federal expenditures and achieve significant budgetary savings. The central bank had already implemented several preliminary measures including non-salary budget reductions, vacancy closures, and early retirement incentives but these steps fell short of achieving the mandated 10% savings target. Spokesperson Paul Badertscher confirmed that all departments will face reductions, stressing the bank’s commitment to maintaining its core monetary policy mandate for Canadians.

The move marks a sharp reversal following years of expansion. The Bank of Canada’s headcount surged during the pandemic, rising from approximately 1,800 employees in 2019 to 2,350 by the end of 2023. The reduction plan reflects a broader belt-tightening trend within Canada’s public sector, which aims to rebalance budgets amid rising fiscal pressures.

In tandem with the central bank’s cuts, the Canadian government is pursuing a sweeping expenditure review led by Finance Minister Francois-Philippe Champagne. The 2025 budget outlines a goal to save C$60 billion ($42.5 billion) over five years, including eliminating about 40,000 positions across the public service. Although the Bank of Canada operates independently, it traditionally aligns with federal cost-cutting policies, as seen during the administration of former Prime Minister Stephen Harper. Other Crown corporations, such as the Office of the Superintendent of Financial Institutions, are also implementing parallel spending reductions.

Meanwhile, new responsibilities are being assigned to the central bank under the Consumer-Driven Banking Act, which grants oversight of emerging financial technologies and open banking systems. To offset the added financial strain, the bank may retain additional remittances to fund its new initiatives. Furthermore, it has committed to a 5% reduction in corporate-level expenditures by 2028 as part of its long-term fiscal discipline plan.

Michael Sabia, Clerk of the Privy Council and head of the public service, acknowledged the human toll of the federal workforce downsizing in a letter to public servants, noting that the 40,000 job cuts will have “real consequences for people who serve their country and for their families.” He emphasized that achieving the government’s C$60 billion savings goal will require terminating certain programs outright and limiting others.

The Bank of Canada’s decision, though controversial, highlights a growing consensus across Ottawa: the era of pandemic-era expansion is over, and the path ahead demands fiscal restraint, even at the expense of public sector stability.