With inflation hovering around 2 percent and an economy characterized by excess supply, coupled with recent indicators suggesting growth weaker than initially projected, the Bank of Canada announced a much-anticipated decision on Wednesday to cut interest rates by an additional half percentage point.
The Bank of Canada has lowered its target for the overnight rate by 50 basis points to 3.25 percent. Consequently, the Bank Rate is now set at 3.75 percent, and the deposit rate is at 3.25 percent.
This follows a similar reduction in October, where interest rates were decreased by 50 basis points, coming on the heels of three consecutive 25 basis point cuts.
The central bank's ongoing rate cuts aim to bolster economic growth and maintain inflation within the midpoint of the target range of 1-3 percent.
The Bank remarked that, since June, interest rates have been significantly reduced, and any further adjustments will be determined "one decision at a time."
"Our decisions will be based on new information and our assessment of its impact on the inflation forecast," the Bank of Canada stated. "Our commitment is to sustain price stability for Canadians by keeping inflation near the 2% target."
The statement also highlighted the potential impact of the incoming U.S. President-elect Donald Trump's administration, noting an increased uncertainty due to possible new tariffs on Canadian exports to the U.S., which could affect the economic outlook.
The Bank of Canada's next monetary policy announcement is slated for January 29, 2025.
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