Bank of Canada cuts interest rates, says fight against inflation ‘worked’
Al Jazeera
The cut on Wednesday, the fourth in a row, was bigger than expected as September inflation sank below target.
The Bank of Canada on Wednesday reduced its key benchmark rate by 50 basis points to 3.75 percent, its first bigger-than-usual move in more than four years, and hailed signs that Canada has returned to an era of low inflation.
The country’s central bank, which hiked rates to a 20-year high to fight soaring prices, has now cut benchmark rates four times in a row since June. Inflation in September sank to 1.6 percent, below the 2 percent target.
“Canadians can breathe a sigh of relief. It’s a good news story,” Bank of Canada (BoC) Governor Tiff Macklem said during a press conference after the rate announcement. “It’s been a long fight against inflation, but it’s worked, and we’re coming out the other side.”
Despite three previous cuts totaling 75 basis points, demand has been muted, sales at businesses are sluggish and consumer sentiment is tepid, hurting economic growth.
“Today’s interest rate decision should contribute to a pickup in demand,” Macklem said, adding that the BoC would like to see growth strengthen.
