In an announcement this morning, The Bank of Canada has lowered its key interest rate to 4.75 per cent, marking the bank’s first rate cut since March 2020.
Last week’s GDP numbers were weaker than expected, increasing the likelihood of a cut – generally speaking, higher interest rates purportedly need more time to impact the economy and address inflation, which, although easing, still poses a risk of stalling above the bank’s 2% target.
Bank governor Tiff Macklem said in published remarks that the bank’s monetary policy no longer needs to be as restrictive.
“We’ve come a long way in the fight against inflation. And our confidence that inflation will continue to move closer to the two per cent target has increased over recent months,”
Economists were largely expecting the move. The inflation rate has moved closer to the bank’s two per cent goal in recent months, with the bank’s preferred core measures of inflation also easing throughout the spring.
The Bank is expected to make it’s next announcement regarding the rates in late July.
Written by: B. Shakyaver