Bank of Canada cuts interest rate, signals more to come if inflation keeps dropping
CTV
The Bank of Canada has decreased its policy interest rate for the second consecutive time and signalled more cuts are coming if inflation continues to ease.
The Bank of Canada has decreased its policy interest rate for the second consecutive time and signalled more cuts are coming if inflation continues to ease.
The 25 basis points reduction brings the overnight rate to 4.5 per cent, returning to levels not seen since June 2023. Last month’s cut from 5 per cent to 4.75 per cent was the first in more than four years.
Bank of Canada Governor Tiff Macklem said the decision was based on economic data showing slack in the labour market, excess supply in the economy and inflation continuing to drop.
“We are increasingly confident that the ingredients to bring inflation back to target are in place,” Macklem said in his opening remarks.
Since the Bank of Canada started raising rates in March 2022 inflation has dropped from a peak of 8.1 per cent in June 2022 to 2.7 per cent in June 2024, after a slight increase in May.
“Looking ahead, we expect inflation to moderate further, though progress over the next year will likely be uneven,” Macklem said.
If inflation continues to ease as expected, Macklem signalled Canadians can expect more rate cuts. Those decisions, he said, will be taken one decision at a time.
