Bank of Canada Announces Third Consecutive Policy Rate Cut
The Bank of Canada reduced its target once again for the overnight lending rate from 4.5% to 4.25%. The move was announced on Wednesday, September 4, and was widely expected by financial markets, making it the Bank’s third rate reduction since the onset of the pandemic.
Canada’s economy picked up in the second quarter of 2024, according to the Bank of Canada, although early indicators show a softening in economic activity. The Bank also stated the labour market continues to slow.
The Bank of Canada continues to focus on elevated housing costs as a significant contributor to inflation; however, it also mentioned both headline and core measures of inflation have moderated and are close to historical norms.
Although excess supply in the economy is helping to lower inflation, the Bank is also monitoring housing and services costs that are pulling inflation in the opposite direction. The Bank stated future monetary policy decisions "will be guided by incoming information" and its assessment of whether further rate cuts are necessary to keep inflation in check.
The Bank of Canada will make its next scheduled interest rate announcement on Wednesday, October 23, and will publish its full outlook for the economy and inflation in its next Monetary Policy Report at that time.
