Bank of Canada Cuts Rates by Half Point

The Bank of Canada has reduced its key interest rate to 3.75%, marking the first 50-basis-point cut since the COVID-19 pandemic. This decrease comes after the rate was previously set at 4.25%, with economists anticipating a larger cut compared to the smaller reductions made in previous months.

The last time a cut of this magnitude occurred was on March 27, 2020, during a series of rate cuts. With inflation concerns easing and prices returning to target levels, the bank aims to support economic growth that has been hindered by high rates.

Bank of Canada Governor Tiff Macklem emphasized the need for stable growth, stating, “We need to stick the landing,” as the decision aims to boost demand.

He pointed out that core inflation is now within target, housing inflation is easing, and global oil prices have declined. However, Canadians continue to reduce discretionary spending due to prior inflation and high interest rates.

Macklem indicated that further cuts could occur if the economy aligns with the bank’s forecasts, but stressed that decisions would be made based on incoming economic data. Major banks have responded by lowering their prime rates by 50 basis points to 5.95%.
NEWS DESK
PRESS UPDATE