The Bank of Canada, after three consecutive quarter-point interest rate reductions, has announced a new plan to cut rates by half a point. This decision aligns with widespread expectations and reflects the bank's ongoing strategy to support economic growth in the current economic climate.
The Bank has adjusted its target for the overnight rate down by 50 basis points, now positioning it at 3.75 percent. Consequently, the Bank Rate stands at 4 percent, with the deposit rate also at 3.75 percent.
This move comes in response to a notable decrease in consumer price inflation, which dropped from 2.7 percent in June to 1.6 percent by September. "With inflation now aligning more closely with our 2 percent target, the Governing Council has opted to lower the policy rate by 50 basis points. This adjustment aims to bolster economic growth and maintain inflation within the desired range of 1 to 3 percent," stated the Bank of Canada in their official communication.
Looking forward, the Bank of Canada indicated that additional rate cuts might be considered if the economy progresses as anticipated. However, any further adjustments will be decided based on forthcoming economic data and its impact on the inflation outlook.
The Bank emphasized its intention to make decisions on a meeting-by-meeting basis, reaffirming its dedication to ensuring price stability for Canadians by keeping inflation close to the 2 percent benchmark.
