Canadian Rates On The Move

In a widely expected move, the Bank of Canada (“BoC”) reduced its benchmark overnight interest rate by 25 basis points (“bps”) to 4.50%.

This was the second straight rate cut from the BoC, with inflationary pressures continuing to moderate and economic conditions slowing as intended.

In its outlook, the BoC noted that it sees inflation continuing to moderate in 2024 before reaching its 2% target in 2025.

The BoC’s concern has shifted from inflation to the Canadian economy and labour market. Canada’s central bank sees some downside risks to Canada’s economy.

Signs point to the BoC cutting rates again in 2024. The BoC noted that each rate decision will be dependent on economic data at the time, suggesting there is no set timeline for cutting rates.