The Bank of Canada cut its key interest rate to 3.75 per cent, the first 50 basis point cut since the COVID-19 pandemic.
Until Wednesday, the rate was 4.25%. Economists had expected the central bank to cut rates more deeply than usual, compared with the 25 basis point (bp) downgrades it made in June, July and September.
of last time The last time banks cut rates of this magnitude was on March 27, 2020.
As concerns about inflation recede, the central bank aims to keep inflation stable and support economic growth, as the out-of-control price increases that triggered the central bank’s initial interest rate hike campaign are now back within its target range. The focus is on lowering interest rates. It slowed down due to pressure from high interest rates.
“We need to hold firm on the landing,” Bank of Canada Governor Tiff Macklem said at a press conference Wednesday morning.
If the economy continues to develop broadly in line with expectations, “the policy rate is expected to be lowered further,” the bank’s news release said.
But he cautioned that the timing and pace of rate cuts would depend on future economic data and their potential impact on the central bank’s inflation outlook.
The release repeated the now-familiar phrase, “We make decisions one meeting at a time.”
“Significant developments will be needed to prevent another rate cut of this magnitude in December,” Avery Shenfeld, chief economist at CIBC World Markets, said in a note to clients.
“However, as has been recent practice, the bank has left its options open by providing no specifics about the size of future individual rate cuts,” Schenfeld wrote.
Macklem spoke at a press conference explaining the decision, which will be livestreamed on this page starting at 10:30 a.m. ET.
Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers speak following the Bank of Canada’s latest decision on its overnight interest rate target. As inflation slows, many expect the central bank to further cut its key interest rate, currently set at 4.25%.
This will continue in the future.
